Bankers Trust, KeyCorp Report Rising Profits, Beating Forecasts
March 31, 2011
Bankers Trust New York Corp. and KeyCorp reported better-than-expected profits, finishing off a week of mostly positive bank-earnings news. Bankers Trust saw profit rise 66% to $151 million, or $1.66 a share, from $91 million, or 98 cents a share, in the year-earlier period. Growth was led by improvements in the investment-banking business and client-processing services, as well as strong results in Latin America, Australia and New Zealand. KeyCorp, following other banks, came out slightly ahead of analysts' consensus estimates, with a solid, across-the-board performance. The bank's profit rose 9% to $217 million, or 92 cents a share, from $199 million, or 83 cents a share. In composite trading Thursday on the New York Stock Exchange, Bankers Trust closed up 75 cents at $71.875, while KeyCorp closed up 75 cents at $38.125. As Bankers Trust attempts to turn away from its traditionally heavy risk-management service business, executives said they were pleased with the growth in other parts of the bank while putting heavy losses and scandals from derivatives behind them. The investment-banking business contributed the bulk of profits, with net income of $109 million, up 47% over the year-earlier period. The increase was due mostly to strong revenue from loan syndications and bond and equity underwriting, the bank said. The bank's so-called risk management services, which includes derivatives, saw a loss of $22 million, mostly resulting from losses in commodity derivatives when copper prices fell sharply during June. Ricki Paris, chief financial officer, said in an interview that without the copper-related losses, client-related risk-management revenue continued at the same pace as the previous quarter. In addition, a category Bankers Trust labels as corporate and other saw a net loss of $22 million, due primarily to a $28 million pretax cost of legal and professional fees related to the settlement of a lawsuit with Procter & Gamble Co. in May and payments for an independent counsel investigation of its derivatives business that was completed in June. Mr. Paris said he is optimistic about prospects for expanding new parts of the business with the help of a strategic merger with Wolfensohn & Co., a small investment-banking firm, which will be completed in the fall. ``We are so happy to have Procter & Gamble behind us as well as the report of the independent counsel,'' said Mr. Paris. For KeyCorp, net-interest income grew 2% to $682 million, which helped boost the net-interest margin by 0.31 percentage point to 4.8%. Loans grew 7%, or $2.9 billion. Return on assets was 1.35%, up from 1.19%. Return on average total equity was 16.93%, up from 16.63%. Noninterest income grew 18% from the year-earlier quarter, fueled by higher credit-card fees and increased income from insurance and brokerage operations. On the downside, noninterest expenses rose 2% to $579 million from the year-earlier quarter, despite a company cost-cutting program. ``What we're looking for is the benefits of the cost-cutting programs and the revenue initiatives that have been under way for some time,'' said Denny Sheena, an analyst at Morgan Stanley & Co. ``We don't quite see it. They're good, solid earnings but we're looking for the next level.''
VastPress 2011 Vastopolis
