Republic New York's Profits Up 9.7%; Boost from Brazilian Investments

A rise in net interest income from Brazilian investments and a reduction in the provision for loan losses pushed first-quarter earnings at Republic New York Corp. up 9.7% to $87.5 million.

Provisions for loan losses fell to $3 million, from $10 million in the first quarter last year, while net interest income rose 9% to $216 million.

Wall Street banking analysts said Republic's earnings came in pretty much as expected.

"It's the same steady-as-it-goes," said Fred W. DeBussey, a banking analyst with Fitch Investors Service Inc.

"They're a well-oiled machine and continue to show the same gradual increases (in earnings) on a steady basis."

Net interest income, the single biggest source of earnings for the bank, rose 9.3% on a fully taxable basis to $225.8 million, boosted largely by an increase in the net interest margin to 2.84% from 2.53% last year.

Temporary investments in short-term assets in Brazil contributed approximately 6% of interest income, or $36 million, compared with 4%, or $19 million last year.

But Mr. DeBussey said he saw little to be concerned about in Republic's exposure to Latin America. He said the bank's major shareholder, Edmond Safra, is well connected through business and family ties to developments in Brazil and other Latin countries.

The bank's total exposure to Brazil, including short-term, medium-term, and long-term Brazilian government bonds, fell to 0.84% of total assets, or $360 million, from $582 million a year ago.

Total exposure to Latin American debt, including Brady bonds, stood at around $888 million, or 2.1% of total assets of $42.3 billion.

In a move to insulate the bank from further declines in the value of its securities holdings as a result of interest rate hikes, Republic shifted a substantial portion of its assets out of long-term securities and reduced the amount of securities it purchases and carries.

These assets were partially replaced by interest-bearing deposits with banks, resulting in a 54% increase to nearly $8.5 billion.

Offsetting this transfer, securities available for sale were reduced by more than 50% to $5.5 billion.

Other operating income, including foreign exchange and precious metals trading and Republic's 49% share of operating earnings from Safra Republic, fell 5% to $99.1 million. +++ Republic New York Corp. New York Dollar amounts in millions (except per share) First Quarter 1Q95 1Q94 Net income $87.5 $79.8 Per share 1.43 1.34 ROA 0.78% 0.72% ROE 15.85% 13.43% Net interest margin 2.84% 2.53% Net interest income 216.0 198.2 Noninterest income 99.1 104.6 Noninterest expense 192.6 175.9 Loss provision 3.0 10.0 Net chargeoffs 3.8 8.4 Balance Sheet 3/31/95 3/31/94 Assets $42,348.0 $41,863.0 Deposits 23,302.0 22,139.0 Loans 9,058 10,052 Reserve/nonp. loans 539.85% 347.18% Nonperf. loans/loans 0.65% 0.89% Nonperf. assets/assets 0.19% 0.28% Nonperf. assets/

loans + OREO NA NA Leverage cap. ratio 6.15%* 5.73% Tier 1 cap. ratio 16.35%* 16.59% Tier 1+2 cap. ratio 27.75%* 28.40% *Estimated ===

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