The credit card industry's two remaining monoline companies both reported strong fourth-quarter earnings gains this week, driven by heavy flocks of new customers.

The healthy performances posted by MBNA Corp. of Wilmington, Del., and Capital One Financial Corp. of Falls Church, Va., are a positive sign for the credit card industry, which has been shaken by record chargeoff rates in recent quarters.

MBNA reported its fourth-quarter net income as $188.3 million, 26% higher than a year earlier. Capital One reported a 22% rise, to $189.4 million.

Both companies referred to 1997 as a "record" growth year, in which voluminous mass mailings and the continued development of cobranded and affinity card programs generated rapid portfolio expansion.

Richard D. Fairbank, Capital One's chairman and chief executive officer, called new accounts the "single most important" factor in earnings growth for 1997. His company added 1.1 million net new accounts in the fourth quarter-its second-largest quarterly gain-to bring its account total to 11.7 million.

At the beginning of 1997, the credit card industry had four monolines. But First USA was sold to Banc One Corp. in the spring, and Advanta Corp.'s card unit was sold to Fleet Financial Group in the fall, leaving the two survivors to show the industry that they could flourish independently.

"Both these companies have focused heavily in marketing and that has more or less been the driver" of their growth, said Thomas Abruzzo, an analyst at Standard & Poor's Corp. in New York.

MBNA also impressed the industry with low chargeoff rates. Though MBNA's chargeoffs increased in the fourth quarter to 4.07% of accounts, from 3.93% in the third quarter, it still stood well below industry averages. (For the month of November, for instance, Standard & Poor's placed average chargeoffs at 6.73%.)

MBNA, the second-largest credit card issuer after Citibank, said its portfolio of receivables amounted to $49.4 billion at yearend 1997, $3.2 billion more than in the third quarter and $10.8 billion higher than at yearend 1996.

MBNA also said it opened 9.4 million new accounts in 1997, largely due to the success of its widely advertised platinum card effort. "We continue to focus on the fundamentals," said MBNA spokesman Peter H. Frank. "We get the right customers, we keep them, and the results speak for themselves."

James Shanahan, a partner at Business Dynamics Consulting Inc. of Nyack, N.Y., called MBNA's winning streak "remarkable."

"To put on those 9.4 million accounts along with the balances that they bring along-about $10 billion-it's amazing," he said.

Capital One, another top 10 issuer, also won its share of plaudits. In 1997, the company augmented its portfolio by $758 million, to $14.2 billion in outstandings. Revenue for the year exceeded $2 billion, a 41% increase from 1996's revenues of $1.5 billion.

"They have come back with a vengeance," said Moshe Orenbuch, senior analyst, Sanford C. Bernstein & Co.

Still, Capital One-which was spun off from Signet Banking Corp. in February 1995-struggled to keep chargeoffs down in 1997. Fourth-quarter chargeoffs were 6.37%, lower than the third-quarter rate of 6.66%, but well above the 4.24% posted in the fourth quarter of 1996.

Capital One also spent 1997 beefing up its marketing budget, which was $65 million in the fourth quarter. At yearend, the company had spent $225 million on marketing, a 9% increase from 1996.

Mr. Fairbank said Capital One's reliance on technology and marketing are paying off. The company, he said, has made a "fanatical investment in building an organization of analytically driven decisions." +++

Capital One Financial Corp. Falls Church, Va. Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $58.2 $40.3 Per share 0.86 0.60 ROA 1.42% 1.11% ROE 26.12% 21.95% Net interest margin 9.24% 8.29% Net interest income 361.6 282.6 Noninterest income 230.4 154.3 Noninterest expense 177.4 148.4 Year to Date 1997 1996 Net income $189.4 $155.3 Per share 2.80 2.32 ROA 1.22% 2.79% ROE 22.98% 22.94% Balance Sheet 12/31/97 12/31/96 Assets $7,078.3 $6,467.4 Deposits 6,087.4 5,727.1 Loans 4,678.7 4,225.4 ===

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