Magazine article American Banker

Morgan's Profits Down 19%; Bank of New York's Up 49%

Magazine article American Banker

Morgan's Profits Down 19%; Bank of New York's Up 49%

Article excerpt

J.P. Morgan & Co. posted a weak second quarter, with profits down 19% as adverse market conditions took their toll, on trading and other revenue.

Meanwhile, Bank of New York's profits were up 49%, fueled by modest loan growth and improved interest-rate spreads, as the first New York money center banks reported earnings on Thursday.

Morgan's earnings were $350 million, down from $431 million in the second quarter of 1993.

That translated to per-share earnings of $1.73, which was lower than the analysts' consensus estimate of $1.81 compiled by First Call, an affiliate of Thomson Financial Services.

Trading Revenue Plunges

Morgan's trading revenue was down 56% to $228 million, from $520 million in the year-earlier quarter.

"Unfavorable market conditions affected Morgan's trading, investment securities, and the underwriting business," said Raphael Soifer, securities analyst at Brown Brothers Harriman. He said he would reduce earnings estimates for Morgan, but did not know by how much.

Morgan said its trading losses came in debt instruments, foreign exchange, and interest rate contracts, while revenue from trading equities and commodities rose during the quarter.

Total revenue was $1.466 billion, down 5% from $1.540 billion in last year's second quarter. Total net interest revenue was $540 million, up 21% from $424 million in last year's second quarter.

Underwriting Volume Off

Corporate-finance revenue fell 24% to $87 million, down from $115 million a year ago. …

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