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Equitable posts record 4Q
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February 11, 1998: 12:38 p.m. ET
Investment banking arm weathers the late-year storm in markets worldwide
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NEW YORK (CNNfn) - Despite the wave of market turbulence worldwide, Equitable Companies Inc. reported fourth-quarter operating profit rose 23 percent to a record on strength in its insurance and investment banking units.
Equitable, parent of the Wall Street firm Donaldson, Lufkin & Jenrette, said operating earnings rose to $170.4 million, or 73 cents per diluted share, from $138.2 million, or 64 cents a share, a year ago.
That matched consensus analyst expectations. Equitable shares (EQ) gained 1-¼ to 54-¼ in midday trading.
Equitable said it expects DLJ to post another strong year in 1998 despite the market jitters that have rocked global financial markets over the past half-year.
DLJ reported a 40 percent gain in operating profits in 1997.
"Higher underwriting revenues, increased mergers and acquisitions fees, growth in trading and merchant banking gains, and increased commission revenues were the factors underlying this excellent performance," said Edward D. Miller, president and chief executive of Equitable.
The financial services giant also said a one-time charge due to amortization costs linked to the sale of real estate holdings was a major factor behind a net loss of $14.1 million, or 9 cents per share, for the period. A year earlier, equitable posted a net loss of $207.9 million, or $1.16 per share. That was offset by gains from discontinued operations.
Equitable also said its planned sale of half of its $4 billion dollar portfolio of real estate should boost profits in 1998.
Meanwhile, insurance operations posted a 35 percent jump in quarterly operating income helped by strong investment performance, asset growth and "favorable mortality experience," said Michael Hegarty, president and chief operating officer of The Equitable Life Assurance Society.
For 1997 overall, Equitable reported after-tax operating profits of $660.6 million, or $2.92 per diluted share, compared with $483.8 million, or $2.26 per share, in the previous year.
Equitable is a member of the AXA group, one of the world's largest asset managers, with about $500 billion under management.
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