Realists in the credit card industry have resigned themselves to the consequences of slowdown, saturation, and perhaps even recession.

But even after coping with record chargeoff and delinquency rates, which occurred anomalously during economic expansion, card issuers continue to enjoy growth in receivables, and many are using their newly honed skills in cobranding and niche marketing to pursue further opportunities.

The profits and margins may not be what they used to be, but they can still beat averages in retail banking, or banking as a whole.

"Issuers who watch the credit ball first and the volume second will be in good shape regardless of the economy," said Robert K. Hammer, head of R.K. Hammer Investment Bankers of Thousand Oaks, Calif.

"There is profit to be made-and improved on-in virtually every credit card product category," Mr. Hammer concluded from his own annual survey of industry profitability. He held to this view even after the card industry's return on assets had declined in 1997 for the third year in a row.

It has become a business of picking spots, and a popular one is the subprime market. Established lenders with a history of serving people with blemished credit records, as well as a new set of competitors that specialize in debt collection, are taking calculated card-issuing risks that they expect will pay off big.

According to RAM Research Corp. of Gettysburg, Pa., subprime receivables are growing 45% annually, well above the 16% rate for another perceived growth category, cobranded cards.

Meanwhile, the Internet has presented new selling opportunities that some marketers expect will be more effective than direct mail. And the affluent market continues to attract: Visa International recently announced its Infinite card for the super-rich, a counterpart to the World MasterCard.

Concerns about the economy have led card lenders to brace for harder times. People's Bank of Bridgeport, Conn., has held "scenario analysis" discussions for the last six months and is looking at ways to reduce expenses.

"We do expect an economic slowdown," said Todd P. Martin, chief economist at People's. "We are putting a lot more effort into the analysis."

"There is already a shakeout well under way," said Jerry Craft, president of Inficorp, a consulting and portfolio management company in Atlanta. "As losses rise, people on all sides of the spectrum are going to say enough is enough, and some players are going to quit," Mr. Craft said.

Chargeoff rates doubled during the recession in 1990, according to Veribanc Inc., a bank ratings company in Wakefield, Mass. Veribanc research director Warren Heller said that if the current chargeoff rate of 5.4% were to double again, 10% would be "a disaster."

But MBNA Corp., the biggest of the monoline card lenders, has been an uninterruptedly bullish beacon for the industry. In the 12 months through Sept. 30, managed loans grew by $10.1 billion, to $56.3 billion. Net income for the first nine months of the year rose 24%, to $538 million, and the return on average assets was up to 3.23%, from 3.12%. MBNA's Sept. 30 delinquency rate was 4.69%, and its loan losses a relatively tame 4.34%.

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