Banks Rebound From Losses of Last Year

Major banking companies reported Monday that their second-quarter earnings rebounded from heavy losses posted in the 1987 period.

Chase Manhattan Corp., J. P. Morgan & Co., Manufacturers Hanover Corp. and Continental Illinois Corp. recorded sharp losses a year ago after making hefty additions to their reserves to protect against possibly uncollectable loans to underdeveloped nations.

Chase Manhattan, the nation’s second largest banking company, said it had an after-tax profit of $224 million in the second three months of 1988, compared to a loss of $1.4 billion a year earlier.

The latest quarter included an after-tax gain of $69 million from the sale of Chase’s interest in Cain Chemical Inc. Chase said it had relatively flat interest income during the quarter.

Chase added $150 million to its loan-loss reserve during the quarter, compared to the $1.73 billion increase that led to the company’s heavy loss in the 1987 period.

Morgan, the parent of Morgan Guaranty Trust Co. and the nation’s fifth largest bank holding company, earned $228.7 million during the April-June quarter, in contrast with a loss of $586.4 million in 1987.

In last year’s second quarter, Morgan increased its loan-loss reserve by $875 million; in the latest quarter, it set aside $30 million.

Morgan attributed the improvement in earnings to the reduction in loan-loss provisions and to an increase in its non-interest operating income. The company said it had lower interest income and higher expenses during the quarter.

Manufacturers Hanover, the nation’s sixth largest banking company, earned $403.1 million in the second quarter, compared to a $1.37-billion loss a year earlier.