Bache Group Inc., parent of Bache Halsey Stuart Shields, one of the country's largest brokerage firms, yesterday said it was halving its quarterly divident to 5 cents from 10 cents.
The drastic move reflected recent poor earnings performance at publicly owned company which is also characteristic of the securities industry in general at the present time.
Bache Chairman John E. Leslie and President Harry A. Jacobs Jr. in a terse announcement, called the dividend reduction "prudent in view of reduced earnings in the second quarter versus a year ago."
Net income for the Bache group plunged by 93 percent in its fiscal second quarter ended Jan. 31 to $191,000 (3 cents a share) from $2.9 million (40 cents) for the same period the year earlier. While small, the profit narrowed Bache's first-half loss to $1.4 million. The year before, it had earned $3.4 million. Revenues for the first half, however, increased by 8 percent to $141.6 million.
Last week, Bache group's vice chairman, treasurer and chief financial officer, Frank A. Digaetano, resigned, reportedly under pressure as a result of what was described as a losing battle to cut costs in the firm's securities-processing operations. The firm's computer-processing system supposedly is obsolete and has been labeled a drain on operating revenues.
Other large securities firms recently have reported sharp declines in net income, reflecting a price slump in both the stock and bond markets which has affected trading profits as well as the general low level of market volume and securities underwriting activity.
Merrill Lynch & Co. net income plunged by 70 per cent in the fourth quarter and by 59 per cent for all of 1977. First Boston Inc., holding company for what is mostly an institutional and investment banking firm, recently reported a 95.3 percent drop in fourth-quarter earnings and an 81.9 percent drop for 1977. E. F. Hutton Group Inc. had only a 40 per cent drop in the fourth quarter and a 32 percent decline for last year.