Monday July 19, 7:05 pm ,,,Major Banks Report Strong Earnings
Several major U.S. banks posted second-quarter earnings Monday that met or exceeded Wall Street's expectations.
Confident consumers charged up their credit cards, bought or refinanced their homes and took advantage of the gravity-defying stock market -- all to the benefit of the banks' bottom lines.
Banks also generated big fees by helping companies sell stock or make acquisitions.
Citigroup (NYSE:C - news) and J.P. Morgan topped estimates, while Bank of America, Wells Fargo and Bank of New York all posted profits that met analysts' forecasts.
The numbers ''are largely being driven by market-sensitive revenues, like investment banking, equity underwriting and foreign exchange trading,'' said Brad Ball, a bank analyst for Credit Suisse First Boston.
Looking forward to the second half of the year, however, Ball said, ''While the momentum looks good thus far in the third quarter, as we get closer to the year 2000, I think transaction volumes and customer flows should slow.''
Here is at the results of banks that reported earnings Monday:
Citigroup Inc.
Citigroup, which owns Citibank, Travelers insurance group and the Salomon Smith Barney investment bank, reported net income of $2.45 billion, or 70 cents a share, for the April-June period. That beat Wall Street's estimate of 65 cents a share, according to First Call Corp.
Citigroup earned $2.24 billion, or 63 cents a share, in the second quarter last year.
The results include a one-time charge of $29 million in the most recent quarter, and a $191 million restructuring charge in the second-quarter last year.
Citigroup, which was created last October by a merger of Citibank and Travelers, has slashed costs and jobs to become more efficient, offering consumers a wide range of products, from simple checking accounts to life insurance and stock brokerage services.
''We do believe the company has the ability to continue to perform well,'' said John S. Reed, co-chairman and co-chief executive officer. ''Some of the benefits of the merger have yet to be realized and we look forward to the coming years.''
As of June 30, the New York-based company had already taken actions to save $1.7 billion in costs, and executives said they would exceed their $2 billion target by the end of the year.
Revenues for the quarter were $14.68 billion, a 12 percent increase from revenues of $13.06 billion in the year-ago period.
Investors responded to the news by sending Citigroup's stock up 18 3/4 cents to $49.18 3/4 a share on the New York Stock Exchange.
For the first half of the year, Citigroup earned $4.81 billion, or $1.38 a share, up from $4.4 billion, or $1.23 a share, in the first half of 1998.
Revenues were $29.19 billion vs. $25.69 billion.
Bank of America Corp.
Bank of America reported net income of $1.92 billion, or $1.07 a share, compared with $2.3 billion, or $1.28 a share, in the same period a year ago.
Those results include a one-time charge of $145 million for the cost of the merger with NationsBank. Excluding that charge, profits from operations totaled $2.06 billion, or $1.15 a share, a penny above analysts' estimate, according to First Call.
The year-ago results include a one-time gain of $277 million on the sale of its Florida branches. Excluding the gain, profits from operations were $2.02 billion, or $1.13 a share.
The Charlotte, N.C.-based bank had revenues of $8.19 billion, down slightly from $8.30 billion in the year-ago quarter.
''Bank of America continues to make significant progress toward our goals, as reflected in our successful merger integration efforts, solid core operating results and many new initiatives aimed at improving and expanding customer relationships,'' Hugh L. McColl Jr., chairman and chief executive officer, said in a statement.
Bank of America's stock fell $1.50 to $74 on the NYSE.
Net income for the first half of the year totaled $3.83 billion, or $2.15 a share, up from $3.63 billion, or $2.03 a share.
Revenues were $16.05 billion vs. $16.46 billion.
Wells Fargo & Co.
Wells Fargo, the No. 7 bank in the country, reported record net income of $931 million, or 55 cents a share, beating Wall Street's forecast by a penny.
The San Francisco-based company earned $719 million, or 43 cents a share, for the second quarter of 1998.
Revenues were $5.31 billion, up from $5.21 billion.
''We're pleased with the progress of our merger integration to date and we continue to be on schedule for systems conversions, which will begin later this year in the overlapping banking states of New Mexico, Nevada and Arizona,'' Dick Kovacevich, Wells Fargo's president and chief executive officer, said in a statement.
The company's stock fell 43 3/4 cents to $42.68 3/4 a share on the Big Board.
Net income for the first six months of 1999 was $1.82 million, or $1.08 a share, up from $1.40 billion, or 85 cents a share.
Revenues were $10.53 billion vs. $10.18 billion.
J.P. Morgan
J.P. Morgan reported a 25 percent increase in second-quarter income, soaring past Wall Street's expectations.
The investment and commercial bank had net income of $504 million, or $2.52 a share, topping analysts' estimate of $2.24 a share.
J.P. Morgan earned $481 million, or $2.36 a share, in the second quarter of 1998. That quarter, however, included a $79 million one-time gain on the sale of the company's global trust and agency services business. Excluding that gain, the New York-based actually posted a healthy 25 percent increase in a year-over-year comparison.
Revenues totaled $2.19 billion, almost flat from revenues of $2.15 billion in the second quarter last year.
Investors responded the the rosy numbers by bidding up J.P. Morgan's stock by 62 1/2 to $138 on the NYSE.
For the first half, net income totaled $1.10 billion, or $5.53 a share, compared with $718 million, or $3.51 a share, in the first six months of 1998.
Revenues were $4.68 bilion. vs. $4.14 billion.
Bank of New York Co.
Bank of New York reported a 10 percent in second-quarter earnings, and announced an aggressive plan to buy back about $1 billion of its stock.
The Bank of New York earned $323 million, or 42 cents a share, matching analysts' forecast. In the year-ago period, the bank earned $295 million, or 38 cents a share.
Revenues totaled $1.08 billion, a 9 percent increase from $985 in the second quarter last year.
The bank's stock rose 43 3/4 cents to $38 on the Big Board.
The Bank of New York said it would buy back 30 million of its common shares upon completion of the sale of BNY Financial Corp. Companies use stock buybacks to increase their earnings-per-share, and therefore the market price.
The company attributed its gains to strong revenue growth in fee-based businesses and its continuing cost controls.
For the first six months, Bank of New York had profits of $639 million, or 82 cents a share, up from $578 million, or 74 cents a share.
Revenues were $2.14 billion, up from $1.94 billion.
=======--------=======--------=======--------=======--------
Monday July 19, 7:30 PM,,FOCUS-Citigroup core profit a record $2.5 billion
By Mary Kelleher
NEW YORK, July 19 (Reuters) - Citigroup Inc.(NYSE:C - news), the No. 1 U.S. financial services company, said on Monday its second-quarter profits before one-time items jumped 21 percent to a record $2.48 billion, beating expectations as it scaled back costs and its consumer business surged.
Citigroup, formed last year from the merger of Citicorp and Travelers Group, earned core income of 71 cents per diluted share in the quarter, exceeding year-ago results of 57 cents. In the 1998 second quarter, core income totaled $2.05 billion.
The financial services giant's results topped the Wall Street forecast of 65 cents a share, according to First Call Corp., which tracks analysts' earnings estimates.
The 1999 second-quarter operating profits exclude a $29 million restructuring charge, while last year's figure excludes a $191 million restructuring reserve benefit.
Net income for the second quarter was $2.45 billion, or 70 cents per diluted share, up from $2.24 billion, or 63 cents per diluted share a year ago, Citigroup said.
''Citigroup's numbers were terrific and we're particularly impressed, given that their trading income wasn't as strong as it was in the first quarter,'' said Lawrence Cohn, an analyst at Ryan, Beck & Co. ''You can really see the progress Citigroup is making in squeezing expenses out of Citibank, particularly on the consumer side, and they have indicated there is more to come.''
On Monday, Citigroup stock ended 6.25 cents higher at $49.0625 on the New York Stock Exchange. In composite NYSE trade, the stock was up 18.75 cents at $49.1875.
Citigroup said a 40 percent rise in core income at its global consumer arm, to $1.11 billion, lifted overall results, along with a 26 percent increase in global corporate and investment banking profits, to $1.26 billion.
Its total revenues rose 10 percent to $14.95 billion.
Citigroup, which has tried to pare costs since its merger, also said it had taken steps to cut about $1.7 billion in expenses and expects to surpass its goal of $2 billion in annualized pretax expense savings by year end.
''The success of our expense reduction magnifies the impact of strong revenue growth on the bottom line,'' said John Reed and Sandy Weill, Citigroup's chairmen and co-chief executive officers.
The company said a decline in some costs at its consumer business, where full-time jobs and other positions have been reduced by about 5,500, aided results, as did a 96 percent gain in credit card profits to $267 million.
Reed told a conference call the recently merged company had yet to reach its maximum potential, especially overseas and also in terms of offering its full line-up of financial products to its vast customer base.
''The potential of the company is probably even stronger, in terms of revenue growth,'' Reed said.
Its retail consumer bank profits soared 186 percent to $106 million, as costs dropped and the sale of investment products and continued growth in client accounts generated fees.
Income at its commercial credit operation rose 45 percent to $87 million, while its international consumer business saw profits jump 25 percent to $303 million.
At its corporate and investment bank, strong investment banking and robust markets lifted results at its Salomon Smith Barney securities unit, whose income rose 75 percent to $610 million on revenues of $3.27 billion.
''Clearly strong markets benefited the quarter, but the company cites principal transactions are only 9 percent of total revenues,'' George Bicher, an analyst at Deutsche Banc Alex. Brown, wrote of Citigroup's earnings. ''With cost savings still to be recognized and good performance at most business units, this performance could be viewed as sustainable.''
Its global arbitrage business, which Salomon Smith Barney scaled back significantly after severe losses during last year's emerging market turmoil, was moderately profitable in the second quarter, it said.
Profits in the corporate and investment bank's emerging markets business rose 22 percent to $295 million in the quarter, while the division that provides corporate banking to Citigroup's top multinational companies fell 34 percent to $158 million because of a $104 million after-tax gain on real estate sales in the 1998 quarter.
Losses at Citigroup's Internet venture, e-Citi, increased 19 percent to $44 million, as Weill and Reed reaffirmed their commitment to doing more business online.
''As we look to the future, it is imperative that we continue to build on our strong presence on the Internet,'' they said.
U.S. banks and brokers are scrambling to sell products over the Internet as their customers rush online. Merrill Lynch & Co. Inc.(NYSE:MER - news), the top U.S. securities firm, recently raised the stakes by announcing plans to offer full-blown Internet stock trading.
=======--------=======--------=======--------=======--------
|
