Magazine article American Banker

Chemical Stock Hurt by Fears That Trading May Wane

Magazine article American Banker

Chemical Stock Hurt by Fears That Trading May Wane

Article excerpt

The blows of investor concerns have rained down harder on Chemical Banking Corp.'s stock than on that of any other money-center bank.

Shares of the New York bank have fallen 20% since Oct. 13. The group is off 12% during that time.

Chemical's shares traded Monday at $36.125, off 75 cents, just a hair above book value. The prolonged selloff has taken the share price down 6% from where it started the year - again, the worst performance among money-centers.

|Persistent Questioning'

Apparently, investors are still debating whether the merger that formed the new Chemical will pay off. At the heart of the matter is whether Chemical's unexpectedly big gains in trading are sustainable and can cover up some of its spending sins.

"There's been persistent questioning about whether the revenue growth is sustainable," said Frank R. DeSantis, an analyst with Donaldson, Lufkin & Jenrette Securities Corp. "A lot of the success in the merger has been related to the revenue in the capital market area."

Chemical Bank declined to reply to analysts' comments or discuss its stock price.

Earlier in the quarter, investors were concerned that interest rates would rise and hurt profits. Now rates are rising, and investors are questioning how Chemical's trading business will fare.

The trading businesses have been very good for Chemical this year. Mr. DeSantis said he expects revenue growth overall to be up 14% in 1993 versus 1992. He forecasts that trading revenues are expected to be up 25%. …

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