Banks’ Quarterly Results Mixed
Some of the nation’s largest banks reported mixed results for the final quarter of 1998, as weak investment revenue hurt some and growth in service fees boosted others.
BankAmerica Corp. and J.P. Morgan reported lower fourth-quarter profits, but Chase Manhattan Corp. and several regional banks showed profit growth, with help from growth in credit card fees.
At BankAmerica, losses from a loan to hedge fund and securities firm D.E. Shaw & Co. and lower capital markets income offset gains from credit card loans.
Wells Fargo & Co., which merged with Norwest Corp. during the quarter, said its operating profit grew 18% as it benefited from increased fees and mortgages.
Separately, Washington Mutual Inc., the nation’s largest savings and loan, said its fourth-quarter operating profit rose 27% to $430 million, or 74 cents a share, as income from mortgage banking jumped 78% and retail banking fees grew 30%. The results, which matched estimates, exclude charges for its $6.9-billion acquisition of H.F. Ahmanson & Co. The earnings were announced after the markets closed.
At a Glance
* BankAmerica’s profit fell 5% to $1.60 billion, or 91 cents a diluted share, in line with estimates. The results exclude a charge of $441 million related to its merger with NationsBank in the latest quarter and a $220-million charge related to NationsBank’s merger with Barnett Banks a year earlier. The figures for the final quarter of 1997 were adjusted as if all three banks were combined then. BankAmerica’s investment in D.E. Shaw continued to drag down its performance. For the full year, BankAmerica’s earnings dropped 21% to $5.17 billion, or $2.90 a diluted share.
* Bank One Corp. said its fourth-quarter operating profit rose 17% to $1.04 billion, or 88 cents a share, excluding a $1.16-billion charge from its merger with First Chicago NBD Corp. A 39% jump in credit card fees helped boost results, which matched estimates. Non-interest income rose 11% and net interest income rose 1.6% as average commercial loans grew 9%.
* Chase said its net income jumped 35% to $1.15 billion, or $1.31 a share, well above analysts’ expectations of $1.19 a share, on strength in consumer lending, global services and currency and derivatives trading. Trading revenue was $522 million, compared with a loss of $78 million a year ago. Securities gains rose 36%. Total non-interest revenue rose 46%, while net interest income rose 2%. Revenue jumped 14% from card member services and grew 6% from regional consumer banking. For the full year, net income rose 4% to $4.02 billion, with earnings per share up 8% to $4.51.
* J.P. Morgan reported operating earnings of $175 million, or 86 cents a share, more than double analysts’ expectations of 38 cents a share, although down 35%. The results exclude an after-tax charge of $86 million for cost-cutting moves. Revenue from equity investments and proprietary investing and trading was down 46%. Non-interest revenue rose 3.3% and net interest revenue fell 29%. For all of 1998, Morgan’s net earnings dropped 35% to $963 million, or $4.71 a share.
* Wells Fargo reported profit from operations of $768 million, or 46 cents a share, matching estimates. The results exclude a merger-related charge of $1.2 billion and a $320-million charge for some loan write-offs at a Puerto Rico unit. Wells Fargo merged with Minneapolis-based Norwest in November, keeping Wells’ name and San Francisco base. Net interest income rose 5% to $2.32 billion, while non-interest income also grew 5%, to $1.56 billion. Credit card fee income rose 8%, service charges on deposits rose 16%, and trust and investment fees and commissions rose 12%.
* BOTTOM LINE: Company earnings charted. C4
