Chase Beats Expectations as Income Surges 16%

Investment banking fees jumped 104% to $648 million following the acquisition of Hambrecht & Quist.
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Chase Manhattan

(CMB)

, the second-largest U.S. banking company, said on Wednesday that its first-quarter net income surged 16%, breezing by analysts' expectations.

For the first quarter, net income rose to $1.36 billion, or $1.59 a diluted share, from $1.17 billion, or $1.32 a share, a year earlier. Wall Street had expected Chase to earn $1.55 a share, according to a survey by

First Call/Thomson Financial

.

Chase finished down 2 1/2, or 3.1%, at 78.

The New York-based bank, which has more than $391 billion in assets, has benefited from the stock market's surge, which has boosted the amount of revenues derived from trading and investment banking activity.

Total trading revenue rose 25% to $1.05 billion while investment banking fees jumped 104% to $648 million following the acquisition of

Hambrecht & Quist

, a West Coast investment bank.

"Revenues reflect strong underwriting fees at

Chase H&Q

, a doubling of the amount of merger and acquisition advisory fees compared to the first quarter of 1999, and a 39% increase in syndication fees," the company said in a statement. "On a pro forma basis, if Chase had owned Hambrecht & Quist since the beginning of 1999, the growth rate of investment banking fees would have been 69%, when compared to the first quarter of 1999."

Private equity investment gains were up 54% from a year ago to $500 million but down from $1.31 billion in the fourth quarter of 1999. Global private banking revenues were up 58% from the year ago to $331 million.

The return on shareholder equity for the year was 24%.

Chase repurchased $675 million of common stock in the quarter.