Citicorp, by far the largest bank credit card lender, charged off a startling 6.2% of its credit card outstandings in 1991, according to American Banker's annual survey of top card issuers.

Among the top 25 companies in bank credit card lending - ranked in tables beginning on page 14 - Citicorp's $1.1 billion of chargeoffs was second on a percentage basis only to American Express Co., which wrote off 8.4% of the loans that were on its books at yearend. American Express' problems were in its Optima card unit.

Though Citicorp dominates the credit card world - its $18 billion of outstandings at yearend was almost twice the size of the No. 2 bank card lender - its chargeoff ratios illustrate the danger of years of headlong growth.

Citicorp's 6.2% of chargeoffs compared with an average ratio of 4.39% for the top 25 bank card issuers last year, according to the survey.

The Federal Deposit Insurance Corp. reported that credit card chargeoffs for all banks in 1991 jumped to 4.32% from 3.2% and 2.8% the two previous years.

For the first six months of 1992 they rose again to 4.96% on an annualized basis.

Citicorp's losses, ahead of the industry curve, considerably worsened last year. Its 6.2% chargeoff ratio compared with 4% in 1990 and 3.4% in 1989. Citicorp declined to comment on last year's chargeoffs.

Analysts See Storm Abating

Despite the evident problems in Citicorp's card portfolio - it also led all banks with $550 million of noncurrent loans on its books at yearend - analysts are in general agreement that the worst is over in the bank's credit card unit.

"People are confident that Citicorp's card business will stay profitable and will increase over the next year or two as credit losses come down," said Raphael Soifer, an analyst at Brown Brothers Harriman in New York.

He and others pointed to data that indicate a general improvement in consumer banking credit problems, partly because consumers have been spending less in the first two quarters of the year. "Chargeoffs tend to lag volumes by a couple of quarters," Mr. Soifer explained.

Upbeat Data from ABA

The American Bankers Association issued data on Friday that support the generally upbeat view. Credit card delinquencies in second-quarter 1992 dropped to 4.19% from 4.31% the period before, the trade group said. The delinquency ratio has not been that low since September 1990, according to the ABA.

Banking industry analysts said that another reason for their optimism on credit card profitability is that funding costs remain low. The wide spreads between interest rates charged on outstanding balances and money borrowed to make the loans continue to more than offset the higher delinquencies and write-offs experienced by most card lenders.

At Citicorp, moreover, the profitable card business stands in stark contrast to its other major consumer loan business: home mortgages.

Focus on Credit Culture

In a widely publicized report leaked two weeks ago, bank examiners lambasted Citicorp for sloppy management practices that caused extremely high mortgage delinquency rates. The mortgage woes have been attributed to a credit culture nurtured throughout the 1980s that stressed building volume at the expense of risk.

Indeed, the model for the mortgage buildup at Citicorp is widely assumed to have been the rapid growth in the credit card unit. However, profit margins in mortgage lending are much thinner than in credit cards, leading to bottom-line losses in mortgages that did not occur in cards.

Citicorp last year continued its strong position as the No. 1 credit card lender. Its $37.9 billion credit card loan portfolio at Dec. 31, 1991, was almost triple the size of the second-largest lender, Chase Manhattan Corp., which reported $12.9 billion of loans.

The sheer size of the Citicorp portfolio allows it to withstand more delinquencies and charge-offs than other issuers, experts said.

|Some Leverage'

"A large, national player that deals with customers they never will meet will have large increase in chargeoffs and delinquencies," said Robert K. Hammer, a credit card consultant in Newberry Park, Calif. "But they might have some leverage there due to lower operating expenses and economies of scale."

The volume totals in this year's American Banker survey for the first time include card loans that were securitized and taken off the books of bank issuers. Citicorp remains the industry leader in securitization. In 1991, it turned close to $20 billion worth of card loans into securities, representing more than half of its portfolio.

MBNA Corp. in Maryland was the next most active securitizer. In 1991, it securitized more than $5.4 billion of its $8.9 billion portfolio.

Known for its affinity marketing relationship, MBNA Corp. also recorded one of the lowest chargeoff ratios among the biggest card issuers. At yearend 1991, it had written off only 2.45% of its card loans.

That performance appears to be continuing this year. MBNA America, the company's lead bank, reported that 1.84% of loans were more than 90 days past due at the end of first-quarter 1992.

That contrasts with 5.95% of loans that were past due on March 31 at Citicorp's main bank card unit, Citibank South Dakota.

Nonbank Incursions Continue

In other findings, the survey shows that nonbanks continued their successful incursion into the card business in 1991. Ten of the Top 25 holding companies in bank card lending last year were not engaged primarily in the banking business.

And two of the companies -- General Electric Corp. and Household International -- are poised to gain even more ground this year as a result of the recent unveiling of general-purpose MasterCards from GE and General Motors Corp.

GE is rolling out its GE Rewards MasterCard through Monogram Bank, a subsidiary of GE Capital Corp. A bank subsidiary of Household is the card issuer for the long-anticipated GM card, a no-fee, variable-rate product that was launched last week with a multimillion-dollar advertising campaign.

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