Hibernia National Bank, New Orleans, along with Household Finance Corp. and Household International Inc., got positive news from rating agencies this week.

Standard & Poor's Corp. improved its long-term outlook on Household International and Household Finance to "positive," from "stable." The rating agency estimated that about $23 billion of outstanding debt was affected.

Moody's Investors Service, meanwhile, placed the long-term ratings of Hibernia National Bank under review for a possible upgrade. Moody's expects to decide soon on the Baa1 rating on Hibernia's deposits and the Baa2 rating on other senior obligations and counterparty ratings.

The company has little rated outstanding debt.

"These are clearly separate stories," said Michael Leit, a fixed-income analyst at Prudential Securities Inc. "They've both benefited from improving asset quality, although to much different degrees."

S&P said improved asset quality of receivables at Household's British and Canadian subsidiaries, as well as of U.S. consumer finance receivables, prompted its change in outlook.

Indeed, S&P recognized the positive trend in Household's reduction of its total of discounted commercial lending receivables, to $699 million at yearend 1994 from a high of $2.1 billion in 1991. The finance company continues to liquidate in an orderly manner with strong reserve coverage, said S&P.

Household's exit from the lower-margin business of first-mortgage origination has let the company focus on the higher-margin consumer finance business at the finance company and credit card business at the bank, said S&P.

With its credit card operation, Household is "doing what Madison Avenue does" in targeting customers, said David Hendler, a fixed-income analyst at Smith Barney Inc.

"This fits our pattern for success," said Mr. Hendler. Household's cobranding arrangement with General Motors is one of the "premier cobranding arrangements in the business. They've sold a ton of cards," he said.

Analysts generally anticipate an S&P upgrade for Household in a few years, as the finance company goes from cutting its expenses to increasing its earnings.

Household's long-term debt has tightened a few basis points since the outlook change was announced.

After a rough ride in the early 1990s, Hibernia has shown "extremely marked improvement on all measures," said Nicholas Krasno, a senior analyst at Moody's.

"Its improvement has been pretty extreme," said Mr. Krasno. Capital ratios have risen far more than at other banks, he said, mostly because Hibernia's ratios had dipped far lower than most other banks' before 1992.

"Capital was something they desperately needed," said Mr. Krasno. After a 1992 restructuring, the bank has started to improve profitability.

Although Mr. Krasno said the banking industry's ratings picture remain mixed, "there is still some upward pressure on some of the bank ratings."

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