Bankers Trust Earnings Rise 6%

Bolstered by trading profits and a virtual lack of new credit problems, Bankers Trust New York Corp. reported Monday that its second-quarter profits rose 6%, to $185 million, or $2.16 per share.

The earnings exceeded the forecasts of Wall Street analysts, fueling a strong rally in the company's stock.

At the close Monday, Bankers Trust was up $4.625, to $57.625, a new 52-week high. Most analysts had expected earnings of from $1.40 to $1.60 per share.

Exceeded Expectations

Even with an estimated 25 cents of earnings from tax benefits, core earnings of $1.90 per share still exceeded virtually all analysts estimates.

"It's an impressive earnings release," said Judah Kraushaar, banking analyst at Merrill Lynch. "Put it all together and it paints a good picture." Based on the quarter, Mr. Kraushaar said his 1991 earnings forecast of $6.70 per share will be revised upward. Bankers Trust earned $4.02 in the six months ending June 30.

Revenues from capital markets activities soared 29%, to $329 million over the year-ago quarter, reflecting strong advances in trading sovereign debt and derivative products. A third of the increase in trading revenues came from sovereign debt trading.

The strong profits gave the New York money-center bank a return on equity of 26%, exceeding its 23.7% return in the first quarter of 1991. The return on assets was 1.27%, versus 0.98% in the first quarter.

Low Credit Costs

Bankers Trust continued to benefit from lower than average credit costs associated with reserving for bad loans. The quarterly provision for credit losses was $52 million, compared with $28 million in the year ago quarter, and $51 million for the first quarter of 1991.

Total net chargeoffs for the quarter were $108 million, including $56 million of refinancing country loans.

It appears that the Shared National Credit Examination recently completed had no meaningful impact on the level of nonperforming loans. Total nonperforming loans fell to $1.76 billion, from $1.83 billion, in the first quarter, while nonperforming highly leveraged transactions fell by $35 million.

Total expenses were up 5% from the second quarter of 1990, but down from the first quarter of 1991.

PHOTO : Bankers Trust New York

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.