Shares of Bankers Trust New York Corp. appear unable to break out of their protracted torpor, dogged by worries about trading activities and criticism on Wall Street of the bank's tight-lip attitude.
Several analysts have sliced earnings estimates in the wake of Bankers Trust's secondquarter results and offered views about the company ranging from lukewarm to decidedly chilly.
Diane B. Glossman of Salomon Brothers Inc. retained her "buy" rating on the shares but made clear that support from a lofty dividend yield, currently at 5.3%, was a major factor.
'Distinctly Lackluster'
She criticized earnings as "distinctly lackluster," warned of potential "runaway expenses," and said the bank's refusal to quantify Brazilian income left a "poor impression?
Brazil this year issued pastdue interest bonds to its bank creditors. Bankers Trust declined to say how much it realized from sale of those bonds, characterizing the income only as "significant."
The bank also demurred on specifying the size of an insurance settlement it got for fire damage at its New York headquarters, estimated by analysts at $20 million. Both the Brazilian income and insurance recovery contributed to earnings as extraordinary items.
Bankers Trust shares were up 12.5 cents Wednesday afternoon, to $68, well below their yearend closing price of $79.12.
Bearish at Natwest
The most negative assessment of the bank comes from Stephen Berman of Natwest Securities Corp., who last week reduced his investment rating of Bankers Trust to "underperform," from "hold."
"I felt less comfortable about their business," he said Wednesday, "and I didn't feel they had provided any insights. You could take a shot in the dark and come up with a more positive view, but it certainly wouldn't be based on anything they've said."
Ms. Glossman said Bankers Trust had "proved unable to launch a meaningful improvement in its quarterly earnings," which at $2.09 per share were not much better than in the first quarter and off 28% from the year before.
The bank's midyear t5.87% return on equity and 0.71% return on assets are low, compared with those of other banks, she pointed out. Improvement would probably require "a major improvement in its trading business."
Doubt on Trading Revenues
Another analyst, Lawrence W. Cohn of PaineWebber Inc., who also reduced estimates of the company's earnings, doubted that a major jump in trading revenues would materialize.
The eight-quarter trailing average for Bankers Trust's trading revenues is $264 million, said Mr. Cohn, who is "neutral" on the stock. The company reported second-quarter revenues in the sector of only $124 million.
Mr. Berman said he is now more skeptical of the merits of Bankers Trust as a long-term holding, feeling "there are some potential long4asting problems in the company's core businesses and strategies."
Meanwhile, two consecutive quarters of poor trading results and the sharply lower secondquarter sales of its derivatives products have managed to damage investor confidence further.
A Friendlier View
"We suspect investor confidence will take several years to rebuild," Mr. Berman said. He recommended that clients "view any trading rally for this stock as a great opportunity to liquidate holdings."
A warmer view of the company was offered by Raphael Soifer of Brown Brothers, Harriman & Co., who has a "buy" rating on the shares.
While the analyst cut his estimates after the quarterly results, he said, "All factors considered, Bankers Trust once again turned in a highly respectable performance despite continued unfavorable market conditions."
