First Union earnings go up 14% Management businesses, corporate finance boost returns after expanding

October 16, 1997|By BLOOMBERG NEWS

CHARLOTTE, N.C. -- First Union Corp.'s third-quarter earnings rose 14 percent as the bank boosted revenue by expanding corporate finance and money-management businesses.

The Charlotte, N.C.-based bank said net income rose to a record $505 million, or 90 cents a share, from $442 million, or 81 cents, in the year-earlier period. The earnings beat the average Wall Street forecast of 89 cents a share from a survey of analysts by IBES International Inc.

First Union shares fell 31 cents to $51.0625. Some analysts said the quarterly results might indicate the bank is having trouble boosting revenue, particularly from loans.

"The bottom line was fine, but revenue growth was sluggish," said George Bicher, an analyst at BT Alex. Brown Inc.

Net interest income rose 6 percent to $1.36 billion, as the bank increased loans 4 percent to $94 billion.

Much of that growth came from the bank's capital markets unit, which arranges financing for companies.

First Union's net interest margin, measuring what a bank earns on loans minus its cost of funds, widened to 4.36 percent from 4.27 percent.

The bank also increased its provision for loan losses 48 percent to $155 million.

Noninterest income increased 28 percent to $764 million, led by increases in money-management and capital markets businesses. Operating expenses rose 9.5 percent to $1.18 million.

Pub Date: 10/16/97

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