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Salomon Rebounds From Loss; Dean Witter Posts 27 Percent Profit Rise

January 23, 1996

NEW YORK (AP) _ Salomon Inc. today reported a fourth-quarter rebound from a year-earlier loss and Dean Witter, Discover & Co., another big Wall Street firm, said its quarterly profits soared 27 percent.

Salomon earned $168 million, or $1.42 per share, in the fourth quarter ended Dec. 31, 1995. That was slightly lower than the average $1.43 per share expected by analysts surveyed by Zacks Investment Research.

In 1994′s fourth quarter, Salomon lost $157 million, or $1.65 per share.

Revenues in the recent quarter, after subtracting interest expenses, soared to $826 million from $96 million.

The parent of the Salomon Brothers investment bank said its businesess broadly recovered, suggesting the firm was climbing out of a slump that resulted in a $399 million loss in 1994, its first-ever annual deficit.

Still, Salomon stock was sharply lower after the earnings were released, falling $1.37 1/2 a share to $36.12 1/2 by midday on the New York Stock Exchange.

Salomon, one of Wall Street’s biggest bond traders, said revenue from securities trading surged to $268 million from a loss of $326 million in the comparable 1994 quarter.

Revenue from investment banking rose 54 percent to $168 million but commissions held roughly steady at $80 million.

``Salomon Inc.’s very strong performance in the second half of 1995 provides a good base for our efforts to become increasingly profitable in 1996,″ Salomon chairman and chief executive Robert Denham said in a statement.

For the year, Salomon earned $457 million, or $3.64 per share, compared with a loss of $4.31 per share in 1994. Revenues, after interest expenses, jumped to $3.15 billion from $1.39 billion.

Meanwhile, Dean Witter reported fourth-quarter profits of $178.1 million, or $1.01 per share, up from $140 million, or 81 cents per share in the year-earlier quarter. The results were stronger than the average 97 cents per share expected by analysts surveyed by Zacks Investment Research.

In NYSE trading, Dean Witter stock was up 25 cents to $50 per share by midday.

Dean Witter said its revenues, after interest expenses, rose to $2.13 billion from $1.79 billion.

The company said profits at its Dean Witter Reynolds brokerage business climbed 31 percent to a record $115.8 million in the quarter, fueled by strong investor interest in stocks and mutual funds.

Profits at its credit card company, meanwhile, grew 20 percent to $62.3 million, benefiting from increased fees from merchants and cardholders and higher interest-rate income. However, Dean Witter said it increased the money set aside for loan losses to 38 percent.

For all of 1995, Dean Witter’s profits grew 16 percent to $856.4 million, or $4.88 per share. That compared to profits of $740.9 million, or $4.27 per share, in the year-ago quarter.

Revenues, after interest expenses, grew to $7.93 billion from $6.60 billion.

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