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Chase 3Q profit tumbles
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October 18, 2000: 2:17 p.m. ET
No. 2 U.S. bank misses Wall St. forecasts; Morgan tops estimates
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NEW YORK (CNNfn) - Chase Manhattan Corp. posted a 24 percent drop in third-quarter earnings Wednesday, missing Wall Street forecasts by a wide margin due primarily to a steep decline in private equity profits and higher investment banking expenses.
Separately, J.P. Morgan & Co., the No. 5 U.S. investment bank which is being acquired by Chase, posted stronger-than-expected third-quarter earnings, driven primarily by growth in its private banking and investment banking revenues.
Chase, the No. 2 U.S. commercial bank, posted earnings before one-time items of $905 million, or 68 cents a share, down from $1.19 billion, or 92 cents a share, a year earlier. Wall Street analysts had forecast 93 cents a share for the latest quarter, according to research firm First Call.
The results helped send Chase and J.P. Morgan shares tumbling from the opening bell amid a sell-off on the broader market. Chase (CMB: Research, Estimates) lost $1.06 to $36.88 in afternoon trading while Morgan (JPM: Research, Estimates) shed $4.62 to $133.
Chase attributed the earnings decline mainly to a $25 million loss in its investment, or private equity, unit that had earned $377 million a year earlier. The New York-based bank said steep losses included in the publicly-held portion of its investment portfolio, particularly in telecommunications, more than offset a $538 million gain realized from the sale of securities during the quarter.
Chase Chief Financial Officer Dina Dublon said the results were a big disappointment. (421K WAV or 421K AIFF)
 Chase's investment banking revenue jumped 16 percent above year-ago results to $1.87 million during the quarter, driven primarily by a sharp increase in merger and acquisition advisory services and equity underwriting fees.
Still, investment banking earnings fall 9 percent, primarily because of a 47 percent rise in expenses related to the $7.7 billion acquisition of U.K. investment bank Robert Fleming Holdings.
That acquisition did pay some dividends on the revenue side, however, as Chase's wealth management business posted a 76 percent increase in revenue to $470 million and a 20 percent increase in profits to $53 million during the third quarter.
Chase said its operating revenue including the Fleming acquisition climbed 3 percent to $5.59 billion.
Mighty Morgan
Meanwhile, J.P. Morgan reported third-quarter profits of $514 million, or $2.77 a share, easily topping Wall Street forecasts of $2.63 a share and the $442 million, or $2.22 a share, it earned a year earlier.
Chase struck a deal to purchase the New York investment bank last month for $33 billion in stock, hoping to bolster its financial services and investment banking businesses, and J.P. Morgan delivered on both fronts during the third quarter.
 Morgan said its third-quarter revenue jumped 17 percent to $2.32 billion, driven primarily by an 11 percent increase in asset management services and a 16 percent increase in investment banking.
Assets under management grew 15 percent to $373 billion.
The results came a day after other big banks, led by Citigroup (C: Research, Estimates), reported profits that met or topped Wall Street forecasts. 
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