J.P. Morgan, Other Big Banks Report Net Income Gains

Some of the nation’s biggest banks reported stronger second-quarter earnings Monday, reflecting what analysts said was a wide gap between revenue from loans and investments and what the banks have to pay to raise money.

J.P. Morgan & Co., Chase Manhattan Corp. and First Chicago Corp. all reported increases over earnings a year ago.

Analysts attributed the improved results to lower interest rates, which have let banks borrow money for less while their revenue from investments and loans has stayed at higher levels.

“Lower interest rates are more than offsetting the effects of the weak economy,” First Boston analyst Thomas Hanley said. “For banks with commercial real estate loans, they are continuing to be a drag, but they are not worsening.”

Morgan reported a 67% increase in second-quarter net income, citing strong revenue growth in each of its major business activities.

The bank said it earned $385 million, or $1.94 a share, compared to $231 million, or $1.17 a share, a year earlier.

It reported good performances in corporate finance and continued strength in investment management, operational and credit-related business.

New York-based Morgan was the nation’s fifth-largest bank by assets as of the end of last year. Its main banking unit is Morgan Guaranty Trust.

Chase Manhattan, the sixth-largest bank, said it earned $152 million, or 83 cents a share, in the second quarter, compared to $132 million, or 80 cents a share, a year earlier.

The earnings include credit loss provisions of $295 million for the three-month period.

New York-based Chase said in a statement that its credit loss provisions were likely to remain at relatively high levels because of continuing weakness in the economy and depressed commercial real estate markets.

The company said second-quarter results were driven by strong performance from its retail businesses, including consumer products, regional banking and global private banking.

It also said that in the wholesale businesses, global corporate finance results showed significant improvement over last year’s second quarter.

First Chicago said it earned $68.2 million, or 79 cents, in the quarter, compared to $57.3 million, or 73 cents, a year ago.

The bank said its commercial and industrial loan portfolio improved in the quarter, but that “the depression in the commercial real estate sector continues unabated and values have not yet stabilized.”

Bank Profits Grow (Net income in millions of dollars) 1992, 2nd quarter: J.P. Morgan: $385

Chase Manhattan Corp.: $152

First Chicago Corp.

1991, 2nd quarter:

J.P. Morgan: $231

Chase Manhattan Corp.: $132

First Chicago Corp.: $57.3