The nation's top 100 bank holding companies earned a dramatic 52% more in 1993 than in 1992, according to an annual survey conducted by the American Banker.

The survey, which compiled yearend results, revealed that net income for the top 100 increased from $20.2 billion in 1992 to $30.7 billion in 1993.

The survey also found record high returns on average assets and average equity for the industry as a whole. The ROA was 1.21% in 1993, the ROE 15.48%.

Analysts said the increased earnings growth reflects an impressive turnaround story for banks. The industry significantly lowered provisions for possible loan losses and jettisoned large amounts of nonperforming assets, they said.

For the top 100 earners in banking, nonperforming assets as a percentage of total assets fell 63 basis points last year -- to 1.10% at yearend from 1.73% on Dec. 31, 1992.

Behemoths such as Citicorp First Interstate Bancorp, and First Chicago Corp., are dramatic examples of turnaround stories in the industry, analysts said.

Citicorp Rose to Top

Citicorp had the highest net income -- $2.2 billion -- beating out 1992 leader BankAmericaCorp. by $265 million. Citicorp's earnings were up 207% from 1992, when the New York company ranked seventh at $722 million.

Citicorp also cut down its percentage of nonperforming assets, from 6.34% of total assets to 5.10%.

First Interstate moved up from No. 22 in earnings to No. 11. The Los Angeles-based bank earned $761 million, a 169% increase over 1992 earnings of $282 million.

First Interstate decreased its nonperforming assets from 1.48% of assets in 1992 to 0.60% of assets in 1993.

By increasing its profits by 760% -- from $93.5 million to $804.5 million -- First Chicago jumped from No. 56 to No. 10. The bank jettisoned $88 million worth of nonperforming assets, cutting the ratio of bad assets from 0.80% to 0.53%.

"You see an industry that has turned around and is now looking for real revenue growth," said Claire Percarpio, an analyst for Chicago-based Duff & Phelps Inc.

"You certainly see an industry that has gone through some very tough years and made some dramatic improvement. They will continue to improve," Ms. Percarpio said.

Much of the improvement in the industry is a result of a 25% reduction in loan-loss provisions, said Dean Witter Reynolds analyst Anthony R. Davis.

However, Mr. Davis and other analysts don't see earnings growth at an equal rate in 1994. "No tree grows to heaven," he said.

The overall numbers for earnings growth are distorted by the involvement of a handful of the largest banks with derivatives, foreign exchange, and fixed income investments.

"The money-center banks had an amazing year in 1993 with regard to all their trading operations," said David S. Berry, director of research at Keefe, Bruyette & Woods Inc.

How much of that growth is sustainable is the big question for the heavily involved banks. Trading revenues were "certainly down in the first quarter" of 1994, Mr. Berry said. "Very likely they'll be down for the full year" because of the magnitude of the first-quarter decline.

Among banks showing the biggest gains in trading revenue last year were Bankers Trust New York Corp. and J.P. Morgan & Co. Bankers Trust earned just under $900 million from trading business in 1992, while in 1993 the bank's trading revenues came in at more than $1.6 billion, Mr. Berry said.

Morgan, which ranked fourth in overall earnings for 1993, raked in $2.059 billion in gross trading revenues, up from $959 million in 1992, according to Mr. Berry.

Mr. Berry also said banks with significant venture capital operations benefited from a high level of initial public offering activity in 1993. First Chicago, for instance, more than doubled its earnings from venture capital operations -- to $483 billion in 1993, from $205 billion.

The huge industry growth for 1993, particularly in the top 100 banks, ought to fuel even more mergers than in 1992. As earnings are expected to drop in 1994, banks will continue to wrestle with each other and nonbank financial institutions for market share.

"The urge to merge is going to intensify," predicts Dean Witter's Mr. Davis.

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