The loss, which followed an after- tax profit of dollars 190m a year ago, included a dollars 37m one-off charge to cover the cost of retirement benefits. Revenues were sharply lower at dollars 1.6bn. But the dollars 89m pre-tax loss at Salomon Brothers still looked bad, particularly in light of record first-quarter earnings by rivals like Merrill Lynch, Bear Stearns and Morgan Stanley.
The figures from the Salomon Brothers brokerage reflected an obligation to put market values on its holdings at the closing day of each quarter, even though most of the positions have longer-term horizons. Salomon warned six weeks ago that the market value of its portfolio had fallen by about dollars 250m by the end of February as a result of such 'paper losses' in its proprietary accounts. The fact that it ended the quarter down only dollars 89m suggests that March was a good month, one analyst noted.
Salomon made pre-tax profits of dollars 503m in the last quarter of 1992 and argues that its performance can be better judged by looking at four contiguous business quarters rather than on a quarter-by-quarter basis. However, even this method does little to flatter the company, with profits of only dollars 258m in the past 12 months compared with dollars 424m over the four previous quarters.
Analysts said Salomon did well outside trading, in controlling costs - compensation was down some dollars 40m from a year ago - and in generating investment banking revenues, which hit their highest levels since the record third quarter of 1989. In early trading in New York, Salomon shares were off 75 cents at dollars 36.75.Reuse content