|
Banks report mixed 4Q
|
 |
January 16, 2001: 1:24 p.m. ET
Citigroup meets forecasts; Bank of America misses by a penny
|
NEW YORK (CNNfn) - Some of the nation's biggest banks reported fourth-quarter earnings that met Wall Street forecasts Tuesday, with Citigroup's profit up 11 percent on higher fees from lending and selling insurance.
Bank of America Corp., meantime, one of the largest U.S. banks by deposits, saw its fourth-quarter earnings slump 35 percent as more of its customers failed to repay their outstanding loans, while both Bank of New York and Wells Fargo Co. met Wall Street forecasts.
Click here to see how financial stocks are performing
The results provided some clues about the financial state of U.S. banks. U.S. banks have growing numbers of bad loans on their books after a string of interest rate increases by the Federal Reserve dampened economic growth and put pressure on some large corporate borrowers. At the same time, a stock market slump hurt banks' investment portfolios in the fourth quarter as well as businesses like trading and managing stock offerings.
And at least some analysts are suggesting that subsequent quarters may not look much better for bank and financial services companies -- even with the expectation that official short-term rates will fall in the months ahead.
Diane Glossman, a banking analyst with UBS Warburg, told CNNfn's Market Call that she expects credit problems will continue to affect banks' ability to collect on their outstanding loans, and that lackluster earnings potential could reduce the performance of bank stocks in 2001. (382KB WAV) (382KB AIFF)
Citigroup meets the Street
Citigroup, the nation's biggest financial services company, posted earnings of $3.33 billion, or 65 cents a share, up from $3 billion, or 56 cents a year earlier. The 65-cent figure, which includes special charges, matches a consensus of analysts surveyed by First Call.
 Revenue for the fourth quarter rose 14 percent, according to Citigroup, whose businesses in addition to Citibank include Travelers Group insurance and the brokerage Salomon Smith Barney.
Citigroup (C: Research, Estimates) said a fourth-quarter slowdown in "several areas of investment banking and brokerage activities" pushed core income for Salomon down 13 percent from the same period in 1999. For 2000, core income for the brokerage jumped 23 percent.
Citigroup's acquisition of consumer finance firm Associates First Capital boosted income for the quarter by $289 million. The company bought Associates for $31 billion in September.
Citigroup stock, one of 30 in the Dow Jones industrial average, rose 94 cents to $54.06 in midday New York trading.
Bank of America misses
Bank of America (BAC: Research, Estimates), meantime, reported fourth-quarter earnings of $1.39 billion, or 85 cents a share, down from $1.10 in the year-ago period. The company said the decrease was due to larger loan losses and slower capital markets business due to a slowing economy.
Bank of America's results were a penny shy of First Call consensus estimates of 86 cents a share.
 The Charlotte, N.C.-based company said its fourth-quarter revenue dropped 1 percent from a year ago because its customers, particularly companies, had trouble keeping up their loan payments in a slowing economic environment. That left the bank with more loan losses, it said.
The bank wrote off $1.08 billion of uncollectible loans in the quarter, more than double the $501 million it wrote off a year earlier. It set aside $1.21 billion to cover the possibility of further losses.
Bank of America warned in December that it would miss earnings targets because of higher credit costs and sluggish capital markets activity, but earlier this month said that it did not have significant trading losses, news that sent its stock tumbling.
Shares of Bank of America fell 88 cents to $48.19 in early trade.
Bank of New York meets...
Bank of New York Co., the parent of one of the oldest U.S. commercial banks, said Tuesday its fourth-quarter profit rose 14 percent, thanks to higher fees from trading stocks, bonds and currencies.
Bank of New York, founded by Alexander Hamilton in 1784, posted net income of $372 million, or 50 cents a share, compared with year-ago fourth-quarter net income of $327 million, or 44 cents. Wall Street analysts had expected the bank to earn 50 cents a share, according to First Call.
 Net interest income, which includes traditional bank operations such as lending, rose 9 percent to $496 million in the fourth quarter from $492 million in the third quarter and $453 in the year-ago fourth quarter.
Bank of New York (BK: Research, Estimates) collects fees from managing and servicing assets and handling clerical duties, such as collecting dividend payments. Fees from managing assets jumped 18 percent. Fees from processing equity and bond trades rose 26 percent.
Bank of New York shares rose 13 cents to $50.50.
...and so does Wells Fargo
And Wells Fargo and Co. (WFC: Research, Estimates), the seventh-biggest U.S. bank holding company, said Tuesday that its fourth-quarter profit rose 9 percent on the strength of recent successful mergers, meeting Wall Street expectations.
 The San Francisco-based bank, which has about $272 billion in assets, earned $1.13 billion in the fourth quarter, or 65 cents per diluted share, compared with $1.04 billion, or 58 cents a share, in the year-ago quarter.
Analysts had on average expected earnings of 65 cents per share, according to First Call.
Shares of Well Fargo slipped 56 cents to $48.13. The bank's shares closed Friday at $48.69 on the New York Stock Exchange, below a 52-week high of $56.38. 
|
|
|
|
|
 |
|
