Magazine article American Banker

U.S. Subsidiaries of 3 Foreign Banks Score Outsized 2Q Earnings Gains

Magazine article American Banker

U.S. Subsidiaries of 3 Foreign Banks Score Outsized 2Q Earnings Gains

Article excerpt

The U.S. subsidiaries of three overseas banks Tuesday reported eye- popping percentage increases in quarterly earnings.

Royal Bank of Scotland's Citizens Financial Group was up 100%, HSBC Americas Inc. gained 30%, and Sanwa Bank California rose 38%.

Analysts attributed the gains-proportionally greater than at major domestic banking companies-to disciplined managements and deep-pocketed parents. But the trend is not universal: Harris Bankcorp in Chicago, an affiliate of Bank of Montreal, reported flat earnings last week due to acquisition-related costs.

"One of the advantages to being owned by a rich parent is that the parent can clean them up," said Merrill Lynch & Co. analyst Matthew Burnell. "They also have the benefit of getting back-office systems at a lower cost" because development expenses are spread over a broader, global base.

Citizens of Providence, R.I., which is 75%-owned by Royal Bank of Scotland and 25% by Bank of Ireland, earned $45.1 million in its third fiscal quarter.

The $15.8 billion-asset unit, which has been on an acquisition tear through New England over the last five years, attributed the doubling of net income to growth in deposits and loans.

"The four-state franchise we've assembled is growing rapidly and paying off in record earnings," said Lawrence K. Fish, chairman and chief executive officer.

Deposits grew by 13%, to $12.9 billion. Net interest income was $147.8 million, up 24%. Net loans grew 12%, to $9 billion, driven by a 22% jump in commercial loans, to $1.5 billion.

Noninterest income rose 9%, to $39. …

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