BT Profits Jump 22%, Mostly From Buying Alex. Brown

Fueled by strong trading revenues and a boost from its recent acquisition of Alex. Brown & Sons, Bankers Trust New York Corp. reported a 22% jump in third-quarter net income, to $246 million.

The $140 billion-asset company's $2.16 in per-share earnings beat analysts' consensus estimates by 15 cents.

"Our strong investment banking revenues began to reflect our new ability to meet the full range of clients' needs. These early successes underscore our tremendous potential to deliver value to clients and shareholders," said chairman and chief executive officer Frank Newman.

Bankers Trust completed its acquisition of Alex. Brown on Sept. 1 and included the investment bank's performance in its quarterly results.

Though Bankers Trust did not break down the exact contribution derived from its new addition, it said that on a stand-alone basis Alex. Brown's third-quarter profits would have been $53 million, versus $26 million a year earlier. Similarly, Bankers Trust's net income, on a stand-alone basis, would have been $193 million, versus $176 a year earlier.

Moreover, Alex. Brown's contribution to Bankers Trust's bottom line went even further, officials said. Of all the deals both companies closed in the third quarter, cross-selling of relationships between Alex. Brown and Bankers Trust accounted for at least 10%. About 28% of transactions now in the pipeline are the result of cross-selling, they said.

"They have a right to be proud," said David S. Berry, of Keefe, Bruyette & Woods Inc. "There is no way you can say this is not a real strong quarter. We saw great trading and investment banking results."

Ronald Mandle, an analyst at Sanford C. Bernstein, said he figured at least 20% of Bankers Trust's third-quarter earnings were derived from Alex. Brown.

"They had very strong earnings from Alex. Brown," he said.

Overall, total revenues were $1.77 billion, up 40%, thanks to increases in most of the company's business units. Total noninterest expenses of $1.4 billion for the third quarter increased $455 million from the same period last year.

Total trading revenues and trading-related net interest revenue increased 49%, to $492 million.

The investment banking business contributed net income of $204 million to third-quarter results, up $102 million from a year earlier and up $68 million from this year's second quarter. The increases reflected higher revenues from corporate finance activities and private equity investments. Real estate investment banking activities also kicked in strong corporate finance revenues.

Risk management services continued a recovery, posting net income of $11 million in the third quarter, up from $5 million last year.

Global institutional services contributed $21 million of net income, up 10.5%. Revenues were helped by the acquisition of NationsBank Corp.'s institutional trust business.

Bankers Trust did experience downturns in its businesses in Australia, New Zealand, and Asia. Net income declined 57%, mainly because of lower trading revenues in Australia and New Zealand. In Asia, a loss of $19 million compared with profits of $4 million a year earlier.

Return on equity in the quarter reached 17.4%, compared with 15.3% last year. +++

Bankers Trust New York Corp. New York Dollar amounts in millions (except per share) Third Quarter 3Q97 3Q96 Net income $246.0 $202.0 Per share 2.16 1.80 ROA 0.70% 0.64% ROE 17.40% 15.30% Net interest margin 1.21% 1.09% Net interest income 315.0 270.0 Noninterest income 1,465.0 989.0 Noninterest expense 1,419.0 964.0 Loss provision 10.0 0.0 Net chargeoffs 11.0 5.0 Year to Date 1997 1996 Net income $659.0 $582.0 Per share 5.80 5.13 ROA 0.66% 0.65% ROE 16.00% 15.00% Net interest margin 1.32% 1.11% Net interest income 986.0 770.0 Noninterest income 3,725.0 3,049.0 Noninterest expense 3,748.0 2,955.0 Loss provision 10.0 5.0 Net chargeoffs 28.0 30.0 Balance Sheet 9/30/97 9/30/96 Assets $140,087.0 $123,481.0 Deposits 46,079.0 28,672.0 Loans 21,303.0 15,318.0 Reserve/nonp. loans 255% 198% Nonperf. loans/loans 1.40% 3.20% Nonperf. assets/assets 0.40% 0.70% Nonperf. assets/loans + OREO 2.50% 5.20% Leverage cap. ratio 4.90%* 5.70% Tier 1 cap. ratio 8.30%* 8.60% Tier 1+2 cap. ratio 13.40%* 12.80% *Estimated ===

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