Banking Giants Report Mixed Earnings Amid Asian Crisis

Strategic Insights -

The Big Three US banking companies, J.P. Morgan & Co., Chase Manhattan Corp., and Citicorp, released their fourth-quarter earnings, showing a mixed bag in the face of the Asian currency and economic crisis. While J.P. Morgan reported a 35% drop in profits, Chase Manhattan and Citicorp saw stronger earnings, offsetting losses in Asia with gains in other businesses. The results have sent shockwaves through the banking sector, with Morgan's stock plummeting by 1.62 1/2 per share and Citicorp's stock closing lower by 87 1/2 cents.

Key Takeaways:

  • J.P. Morgan's fourth-quarter profits fell to $271 million, or $1.33 per diluted share, a 35% drop from $419 million, or $2.04 per share, in the same period last year. Analysts had expected $1.57 per share.
  • Chase Manhattan Corp. reported a 4.5% rise in profits, earning $874 million, or $1.94 per diluted share, in the fourth quarter, matching analysts' expectations. The company's stock rose by $1.69 per share.
  • Citicorp achieved a fourth-quarter profit of $1.06 billion, or $2.20 per share, exceeding analysts' forecasts of $2.18 per share. However, its stock ended lower by 87 1/2 cents a share.
  • Banc One's earnings rose 7.4% in the final quarter of 1997, partly driven by growth in its credit card business, acquired from First USA Inc. for $7.9 billion last June.
  • Wells Fargo & Co.'s profits more than doubled in the fourth quarter, earning $298 million, or $3.36 per diluted share, and closing up by $8.19 share.

Statistics:

  • J.P. Morgan's net income totalled $1.465 billion, or $7.17 per share, for the year 1997, down 7% from $1.574 billion, or $7.63 per share, in 1996.
  • Chase Manhattan earned $3.71 billion, or $8.03 per share, for the full year 1997, up from $2.46 billion, or $4.94 per share, in 1996.
  • Citicorp achieved a profit of $3.59 billion, or $7.33 per share, for the full year 1997, down from $3.79 billion, or $7.43 per share in 1996.
  • Banc One's full-year earnings were $1.3 billion, or $2.19 a diluted share, compared to $1.67 billion, or $2.70 a diluted share, in 1996.
  • Wells Fargo's full-year earnings totalled $1.1 billion, or $12.77 per diluted share, compared to $1 billion, or $12.21 per diluted share, in 1996.

Sources:

  • J.P. Morgan & Co.
  • Chase Manhattan Corp.
  • Citicorp
  • Banc One
  • Wells Fargo & Co.