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Banks post lower profits
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October 17, 2001: 1:27 p.m. ET
Citigroup, J.P. Morgan Chase, and FleetBoston report reduced income.
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NEW YORK (CNNmoney) - The nation's two largest banks reported third-quarter earnings Wednesday, with both Citigroup and J.P. Morgan Chase saying the Sept. 11 attacks adversely affected results.
Citigroup reported lower third-quarter earnings due to costs associated with the terrorist attacks, although the country's largest bank and insurance holding company met lowered Wall Street expectations.
The company earned $3.3 billion, or 63 cents a share, in the quarter before special charges for restructuring and merger-related items. That's down from $3.5 billion, or 68 cents a share, on the same basis a year earlier but in line with forecasts of analysts surveyed by First Call.
The latest results include costs of $502 million, or 10 cents a share, from after-tax losses due to insurance claims related to the attack, as well as $200 million, or 4 cents a share, from the disruptions of the company's business from the attack. Earnings also were cut by $120 million due to the drop in value of equities in the wake of the attack.
Citigroup (C: up $0.42 to $46.51, Research, Estimates) also said it expects 15 percent growth in fourth-quarter earnings. First Call forecasts fourth-quarter earnings per share of 76 cents, which would be a 17 percent increase from the 65 cents a share it earned a year earlier.
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Separately, J.P. Morgan Chase, the country's second-largest bank, posted a third-quarter profit of $1.04 billion, or 51 cents a share, down from $1.42 billion, or 70 cents a share, a year earlier.
Analysts expected the company to earn 50 cents a share, according to earnings tracker First Call.
"Overshadowing this quarter were the tragic events of Sept. 11," President and CEO William Harrison said. "In this challenging environment, we think the best strategy is a tight focus on controlling risk and expenses."
Including restructuring and merger charges related to the acquisition of Chase Manhattan Bank, the company reported third-quarter earnings of $449 million, or 22 cents a share, compared with $1.4 billion, or 69 cents a share, a year ago.
J.P. Morgan Chase (JPM: up $1.07 to $35.01, Research, Estimates) said it expects annual savings from its merger of $3.6 billion, well ahead of its original estimate of $2 billion. Despite the increased cost saving, the company sees total restructuring costs of $4.3 billion, $1.1 billion more than previous estimates.
In a conference call following J.P. Morgan's earnings release, the company said it did not see fourth-quarter profits exceeding its third-quarter earnings.
"Overall for the firm, I don't have the basis for expecting the fourth quarter will be better than the third quarter," said J.P. Morgan's chief financial officer, Dina Dublon. "For next year, we have the momentum of declining expenses but still uncertainty about the revenue environment."
Analysts expect J.P. Morgan to earn 66 cents per share in the fourth quarter, according to First Call.
In addition, FleetBoston Financial Corp. said quarterly earnings fell 21 percent as weak stock markets slashed brokerage and investment banking revenues.
Fleet, which owns discount brokerage Quick & Reilly and investment bank Robertson Stephens, reported earnings of $766 million, or 70 cents a share, in the third quarter. That compared with a profit of $969 million, or 87 cents a share, last year.
Analysts expected the company to earn 70 cents, according to First Call.
"An economic slowdown was well under way prior to September 11 and has now worsened," said FleetBoston's chief executive, Terrence Murray. "For Fleet, the biggest impact has been seen in our capital markets businesses, which continued weak throughout the third quarter."
-from staff and wire reports 
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