Bankers Trust earnings drop less than expected

Profit dips 37% after cut in loans, investments

April 27, 1999|By BLOOMBERG NEWS

NEW YORK -- Bankers Trust Corp. said yesterday that first-quarter earnings fell 37 percent, less than analysts expected, as it reduced emerging-markets loans and investments before its acquisition by Germany's Deutsche Bank AG next month.

Reporting earnings for the final time as an independent company, the nation's eighth-largest bank and parent of Baltimore-based BT Alex. Brown Inc. said net income fell to $140 million, or $1.30 a share, from $222 million, or $2.01, in the first quarter of 1998.

Analysts had expected it to earn $1.08 a share, according to a survey of six analysts by First Call Corp.

The bank's loss on a portfolio of emerging-markets loans and investments doubled to $82 million as it reduced its business in regions from Russia to Brazil to Korea. Bankers Trust has been reducing its emerging-markets exposure over the past few quarters after it lost $488 million in the third quarter on bad bets in securities and investments in Russia and high-yield bonds.

"Bankers Trust is feeling pressure" to reduce its emerging-markets exposure because of the merger, said James Schmidt, portfolio manager at John Hancock Advisers Inc. in Boston, which owns $11 billion in financial services stocks.

"They can't get out of that stuff at the same place they got into it," he said.

Bankers Trust shares were unchanged yesterday at $90.0625. Deutsche Bank in November agreed to pay $93 a share in cash, or about $10.1 billion.

Investment banking income at Bankers Trust, which specializes in providing high-yield loans and bonds to riskier borrowers in technology, health care and communications, fell 60 percent to $72 million on lower revenue from corporate finance fees and private equity investments.

Trading and sales income at Bankers Trust rose 34 percent to $86 million, driven by a gain from the bank's investment in Long-Term Capital Management LP, the hedge fund that required a $3.6 billion takeover by a group of 14 commercial and investment banks last year. Bankers Trust, which invested $300 million in Long-Term Capital last year, said trading and sales income would have declined without that investment.

Long-Term gained 11.76 percent in the first quarter before fees, which indicates that Bankers Trust's investment generated income of about $30 million in the quarter.

Net interest revenue fell 35 percent to $261 million.

Pub Date: 4/27/99

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