Citicorp, other big banks report weak 4th quarter

January 16, 1991|By NEW YORK TIMES NEWS SERVICE

Three large New York banking companies -- Citicorp, Manufacturers Hanover and Chemical -- announced poor quarterly results yesterday, reflecting losses on loans for real estate projects and some corporate takeovers. The losses overshadowed the benefits of falling interest rates and cuts in their work forces.

In California, Wells Fargo said its profits fell slightly because of the costs of acquiring failed savings associations and an increase in troubled real estate loans.

Among other California banking companies, Security Pacific announced a large loss for the quarter and First Interstate posted a profit.

"As the quality of bank loans continues to deteriorate, the theme for large banks has been to sharply increase the reserves for loan losses in the fourth quarter of 1990," said Thomas Hanley, a banking analyst at Salomon Brothers Inc.

He said bankers were hoping that reserves set aside in 1990 would be enough to handle losses realized this year and next, which would allow profits to improve.

Following are details of the companies' results:

* Citicorp, the nation's largest banking company, said it lost $382 million in the fourth quarter of last year, as it set aside $450 million in reserves for bad loans, up from $94 million the previous quarter. A year ago, Citicorp lost $784 million in the quarter, when it added $1 billion to its reserves for losses on loans to developing countries.

Despite the loss, Citicorp earned $458 million, or 99 cents a share, last year, down 8 percent from $498 million, or $1.16 a share, in 1989.

Consumer banking, one of Citicorp's strongest businesses in recent years, earned more than $979 million in 1990, despite a 25.7 percent decline in fourth-quarter profits.

Citicorp's results were in line with the estimates it issued a

month ago, when it also said it would cut its dividend to 25 cents a quarter from 44.5 cents starting early this year.

On the New York Stock Exchange yesterday, Citicorp's shares gained 12.5 cents to close at $12.25.

* The most surprising weakness among the large New York companies was at Manufacturers Hanover Corp., which until the last several weeks appeared to have avoided the worst of the real estate problems affecting other banks.

But in announcing a quarterly loss of $67 million yesterday, the company also said it was cutting its dividend to 47 cents a quarter from 82 cents. In the 1989 quarter, Manufacturers posted net income of $62 million.

"The weak economy put pressure on our portfolio," said John F. McGillicuddy, the company's chairman. He noted that the reduced dividend would add about $100 million in capital a year and added that he expects the company to return to profitability in 1991.

Big problems for the company included $181 million in loans to Best Products Co., a catalog showroom company that filed for bankruptcy last week.

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