Citicorp, which has been dogged by huge commercial credit problems for the past two years, reversed its results for the fourth quarter of 1992, earning 53 cents a share, or dollars 280m, after losing 53 cents, or dollars 133m, during the same period the year before.
John Reed, chief executive, said the results showed Citicorp, America's largest bank, has 'successfully completed its two-year improvement plan', designed to cut costs and raise capital.
The bank's annual operating margin increased to more than dollars 7.1bn in 1992 from dollars 4.8bn in 1990, with more than half the gains coming through reduced costs.
Wells Fargo, the West Coast bank, stunned the market by reporting a final-quarter profit of dollars 58m, or 83 cents a share, despite its huge exposure to the depressed California market.
The profit compared with a loss of dollars 231m, or dollars 4.59 a share, the year before, and came as a result of sharply lower loan losses.
Wells Fargo's shares, halted for three hours because of an order imbalance, soared 15 per cent to 98 1/4 when trading resumed in New York late in the day. The unexpectedly strong results helped all the main West Coast financial institutions, with some economists suggesting that California's recession might not last as long as the downturn that has affected the rest of the United States.
Chemical Banking, based in New York, also turned around a year-ago loss, making dollars 304m or 1.09 a share in the last three months of 1992, after losing dollars 420m or dollars 2.49 a share a year before. The bank, which merged with Manufacturers Hanover Bank last year, saved dollars 280m in combined costs, 'clearly validating the merger', John McGillicuddy, chairman, said.
The improvement in US banking profits suggests that many of the loan-loss provisions that banks took in the past year might not be necessary, Brian Fabbri, chief economist with Midland Montagu in New York, said. 'There's activity out there that suggest their businesses are worth more than many of us thought a year ago.'Reuse content