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Major Banks See Big Profit Gains in '93 : Finance: Wells Fargo, First Interstate and others cite sharp declines in losses on problem loans.

January 19, 1994|CHRIS KRAUL | TIMES STAFF WRITER

Wells Fargo, First Interstate Bancorp and several other major U.S. banking concerns posted big profit gains while reporting shrinkage in their problem loans.

Wells Fargo's fourth-quarter profit jumped to $190 million, up 228% from the year-ago figure of $58 million. For the full year, the bank reported net income of $612 million, more than double 1992's net of $283 million.

Improving the quality of its loans helped First Interstate boost its fourth-quarter profit to $146 million, a 78% increase over the same period last year. For all of 1993, the bank's profit totaled $737 million, compared to $282 million in 1992. First Interstate's board also approved the repurchase of up to 1.5 million of its common shares.

Benefiting from reduced loan losses, New York-based money center banks also reported strong profits, and two growing "super-regional" banks reported record profits.

The improved performance at San Francisco-based Wells Fargo was the result of a sharp reduction in loan-loss provisions taken during the year. The bank's loss provisions for 1993 were $550 million, less than half the $1.2 billion taken in 1992 to write down bad assets. Meanwhile, the bank's asset size and net interest income remained virtually unchanged.

Wells Fargo stopped short of saying the decline in loan losses represents a clear signal that California's economy is recovering, noting that it has maintained a relatively high level of reserves against possible future loan losses. Chief economist Joseph Wahed said the bank is still getting "mixed signals" on whether or not the economy is gathering steam.

Despite the profit increases, the stock market reacted negatively to the news from the big California banks. Wells Fargo's shares closed down $2.375 at $133.75 in New York Stock Exchange trading. First Interstate's shares slumped $3 to close at $65.75.

Chase Manhattan saw its fourth-quarter net income reach $313 million, up 85% from a year ago. Chase's full-year profit was $966 million, up 51% from 1992.

Chemical Banking's fourth quarter net rose 14% during the quarter to $347 million, while its full-year profit rose 44% to $1.6 billion.

Citicorp, the nation's largest bank, reported a fourth-quarter profit of $575 million, nearly double that of the same period last year, despite taking $604 million in restructuring costs and write-downs related to the sale of its Quotron unit. For the full year, Citicorp's profit was $2.2 billion, triple its 1992 net income of $722 million.

Continental Bank's profit rise was not as dramatic. Fourth-quarter income at the Chicago-based bank was $68 million, up 11% from the same period last year. For all of 1993, the banking concern earned $258 million, up 16% from the previous year. Continental's shares finished Tuesday trading up 12.5 cents at $26.

Among the "super-regionals," Nationsbank of Charlotte, N.C., said fourth-quarter profit rose 59% to $373 million. For the full year, net income was a record $1.5 billion, up 31% from 1992.

Banc One Corp. of Columbus, Ohio, said fourth-quarter profit of $286 million rose 39% from the same period last year. Its full-year profit increased 13% to $1.14 billion, also a record.

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