Declines in trading revenues battered fourth-quarter earnings at Chemical Banking Corp. and Chase Manhattan Corp., while profits rose to a record high of $201 million at Bank of New York Co.

Chemical said earnings slumped 48%, to $179 million, and Chase Manhattan posted a decline of 27%, to $229 million.

Rising interest rates and turmoil in emerging securities markets, plus a $65 million charge for retirement programs, accounted for much of the drop in earnings at Chase. Trading revenues at Chemical also fell dramatically, by 82% to $45 million.

Chemical's results were hampered by a previously announced after-tax charge of $152 million to cover severance pay and asset sales associated with a restructuring. Without the charge, Chemical would have earned $331 million in the fourth quarter.

Meanwhile, tight expense controls and a rise in the net interest margin to 3.44% from 3.12% helped boost results at Bank of New York. The bank also saw an increase in net yield on interest-earning assets to 4.39% from 3.83%. However, noninterest income dropped to $298 million from $307 million.

Full-year earnings rose 25% at Chase, to $1.2 billion, yielding $5.87 a share. Bank of New York's full-year results were up 34% to $749 million, or $3.70 a share.

Including the restructuring charge, 1994 earnings declined slightly at Chemical to $1.3 billion, or $4.64 per share.

Total assets rose 12% at Chase to $114 billion and 14% at Chemical to $171 billion, mainly as a result of revisions in accounting practices. Assets at Chase also grew because of retail loan growth.

Bank of New York's assets were up 7% to $49 billion, in part because of a spurt in loans to $33 billion from $31 billion.

Although Wall Street was prepared for trading-related declines at the money-center banks, banking analysts expressed surprise at the unusually large number of fourth-quarter special gains and losses at Chase and Chemical.

Chase, for example, booked $30 million in gains from the sale of its Florida banking unit, a $32 million charge for "productivity initiatives," and a $65 million charge for retirement programs. Net loan chargeoffs, however, fell to $95 million, down $584 million from the comparable period last year.

Chemical's earnings were adversely affected by two previously announced items: the restructuring charge and a $70 million loss from unauthorized trading in the Mexican peso. Chemical dramatically slashed nonperforming assets, however, mainly through sales of problem loans. Total nonperforming assets fell to $1.1 billion at yearend, down more than $1 billion for the quarter and $2.4 billion for the year.

"Chemical and Chase's trading revenues were worse than expected after (warnings that) they were going to be bad, but that was offset at both companies by special gains," noted David S. Berry, a banking analyst with Keefe, Bruyette & Woods Inc. "Both banks looked like they were forever plagued with problem credits, but they now seem to be getting beyond them."

"The glass is either half empty or half full, depending on how you look at it," remarked Diane Glossman, an analyst with Salomon Brothers Inc.

"Looking at bottom-line returns, this is clearly not Chase or Chemical's best quarter, but if you slice through the information, credit quality has shown dramatic improvements in the fourth quarter, so all is not lost even if trading results are poor."

PaineWebber Inc.'s Lawrence Cohn offered the least charitable assessment. "The Chase numbers look awfully weak, and Chemical doesn't look very strong either," Mr. Cohn said.

"Both companies are getting squeezed on margins, and neither is enjoying any particular strength in loan portfolios. The reality is, these are tough times for New York banks."

"After years and years of downsizing, wholesale lending continues to be a lousy business, and the expense base both institutions bring to that business is still too large," he added.

However, analysts had nothing but praise for Bank of New York's results. "Wonderfully straightforward and better than expected," Mr. Berry said. "No special charges, trading was trivial, and expenses were flat year to year."

Separately, Citicorp confirmed an 81% rise in fourth-quarter earnings to slightly more than $1 billion. The bank also raised its quarterly dividend to 30 cents from 15 cents per common share, which it had been paying since June 1994. +++ Chemical Banking Corp. New York, NY Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $179 $347 Per share 0.63 1.23 ROA 0.42% 0.94% ROE 6.29% 13.38% Net interest margin 3.55% 3.65% Net interest income 1,169 1,149 Noninterest income 815 1,053 Noninterest expense 1,593 1,335 Loss provision 85 286 Net chargeoffs 258 232 Full Year 1994 1993 Net income 1,294 $1,604 Per share 4.64 5.77 ROA 0.78% 1.11% ROE 12.32% 16.66% Net interest margin 3.61% 3.73% Net interest income 4,674 4,636 Noninterest income 3,597 4,024 Noninterest expense 5,509 5,293 Loss provision 550 1,259 Net chargeoffs 1,095 1,281 Balance Sheet 12/94 12/93 Assets $171,423 $149,888 Deposits 96,506 98,277 Loans 78,767 75,381 Reserve/nonp. loans 266.95% 116.56% Nonperf. loans/loans 1.18% 3.44% Nonperf. assets/assets 0.66% 2.35% Leverage cap. ratio 5.9% 6.8% Tier 1 cap. ratio 8.1%* 8.1% Tier 1+2 cap. ratio 12.2%* 12.2% *estimated Chase Manhattan Corp. New York, NY Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $229 $313 Per share 1.10 1.53 ROA 0.75% 1.18% ROE 11.3% 17.9% Net interest margin 3.68% 4.33% Net interest income 911 1,008 Noninterest income 672 878 Noninterest expense 1,275 1,199 Loss provision 90 195 Net chargeoffs 95 679 Full Year 1994 1993 Net income 1,205 $966 Per share 5.87 4.79 ROA 1.01% 0.94% ROE 15.8% 14.6% Net interest margin 3.89% 4.33% Net interest income 3,714 3,892 Noninterest income 3,053 2,149 Noninterest expense 4,472 4,520 Loss provision 500 995 Net chargeoffs 517 1,337 Balance Sheet 12/94 12/93 Assets $114,038 $102,103 Deposits 69,956 71,509 Loans 63,038 60,493 Reserve/nonp. loans 214% 135% Nonperf. loans/loans 0.10% 1.7% Nonperf. assets/assets .8% 1.9% Leverage cap. ratio 7.37% 7.81% Tier 1 cap. ratio 8.30% 8.44% Tier 1+2 cap. ratio 12.78% 13.22% Bank of New York Co. New York Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $201 $157 Per share 1.00 0.76 ROA 1.55% 1.32% ROE 19.03% 16.16% Net interest margin 4.39% 3.83% Net interest income 486 392 Noninterest income 298 307 Noninterest expense 413 409 Loss provision 39 50 Net chargeoffs 83 85 Full Year 1994 1993 Net income $749 $559 Per share 3.70 2.72 ROA 1.49% 1.20% ROE 18.49% 14.98% Net interest margin 4.11% 3.84% Net interest income 1,763 1,550 Noninterest income 1,289 1,319 Noninterest expense 1,646 1,646 Loss provision 162 284 Net chargeoffs 335 379 Balance Sheet 12/94 12/93 Assets $48,883 $45,546 Deposits 34,090 32,159 Loans 33,083 30,570 Reserve/nonp. loans 266.7% 179.6% Nonperf. loans/loans 0.90% 1.77% Nonperf. assets/assets 0.72% 1.40% Leverage cap. ratio 7.90 7.90 Tier 1 cap. ratio 8.42% 8.87% Tier 1+2 cap. ratio 12.38% 12.86% ===

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