Banks make nearly twice as big a share of their net operating income from fees as credit card operations do, according to a study.

The consumer perception that card issuers have nickel-and-dimed them runs too deep for such a fresh perspective to erase, analysts said, however.

Forty-eight percent of banks’ first-half income came from fees, compared with 25% of the credit card industry’s, according to the study by R.K. Hammer Investment Bankers, a credit card portfolio specialty firm in Thousand Oaks, Calif. The pattern was similar last year: 45% for banks, 24% for the card industry.

“The card business has been taking a lot of heat for fees, but banks charge twice as much as cards,” said Robert K. Hammer, chairman and chief executive officer of the firm.

Mr. Hammer said he surveyed a range of small, midsize, and large banks. About 10% to 15% of banks’ fees come from investment banking, he estimated; the rest, from consumers.

Though fee income has grown steadily at both banks and card issuers in the past five years, bank fees — such as mortgage points and investment banking charges — have grown faster, Mr. Hammer said.

The study was released just after Providian Financial Corp., a top-10 card issuer, agreed to pay $300 million in the largest settlement that the Office of the Comptroller of the Currency had ever brokered in an enforcement case. Providian was accused of myriad deceptive business practices, such as charging unfair ancillary fees to its customers.

Another major card issuer, Bank One Corp.’s First USA unit, has also been accused of charging excessive late-payment and over-limit fees to its customers last year.

Though banking companies actually depend much more on fees, card issuers attract more complaints because their charges appear to be “snuck in on the back end,” an industry observer said.

“It’s a psychological thing,” said Marc Sacher, managing associate at Auriemma Consulting Group of Westbury, N.Y. “It has to do with how the fees are positioned.”

Most people do not complain about bank fees, which they perceive as a fair charge for certain products, such as a checking account or mortgage, Mr. Sacher said. Nor do they mind paying an annual fee for a frequent-flier cobranded card, because they believe they are getting value for their money and the cost is explained up-front, he said.

James Shanahan, a partner in the Newark, Del., office of Business Dynamics Consulting, said the fact that card issuers derive less of their income from fees than do other banking operations proves how efficient the card industry has become.

The credit card business “is one of the most efficient systems ever developed in the banking industry,” Mr. Shanahan said. Card issuers got into trouble because of “how they implemented the fees. They tried to slip them through.”

In a separate study, Mr. Hammer found that in the first six months of this year 19 credit card portfolios — worth a total of $4.85 billion — changed hands. If this dollar volume continues through yearend, 2000 would be the quietest year for credit card portfolio sales since 1996, when R.K. Hammer recorded 21 sales totaling $7.1 billion of assets.

As consolidation has advanced, the dollar volume of portfolio sales has ebbed, and giant transactions are much more rare. Last year there were 21 deals, covering $19.4 billion of assets, and in 1998 the 26 transactions totaled $32.3 billion, according to R.K. Hammer, which has been tracking portfolio sales since 1986.

The two largest portfolios sold this year each had about $1 billion of receivables, and both sold at a premium of 17.1%. KeyCorp sold its portfolio to Associates First Capital Corp., and Bank of America sold a small piece of its card business to Citigroup.

An additional $6.5 billion of deals are in the pipeline, Mr. Hammer said, including First Union’s $4.8 billion portfolio, which is seeking a buyer. About 30 portfolios are likely to be sold this year, he said.

Signaling that consumer credit quality has strengthened, the average premium on portfolio sales has risen, according to Mr. Hammer. For the first six months of this year the average was 16.97%, up 3.4 percentage points from Dec. 31. Premiums this year ranged from 5% to 25.3%.

“Prices are going to continue to climb as credit quality seems to be continuing to improve,” Mr. Hammer said.

“Super-prime” portfolios sell for an average premium of 22%, Mr. Hammer said, and “prime” portfolios average 14%. A super-prime portfolio has an average chargeoff rate of 3.75%, compared with 6.25% for a prime portfolio, he said.

The average portfolio price in the first six months was $255 million, with an average size of 255,000 accounts, the study found.

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