Fannie Mae earned $667.8 million in the second quarter, 17% more than a year earlier.

Its net interest margin, 118 basis points, was substantially wider than the year-earlier 113, though thinner than the 120 of first quarter 1996.

Lawrence M. Small, president, said higher guaranty fees, reduced credit losses, and a share buyback also contributed to a 17% increase in earnings per share, to 61 cents.

Separately, Fannie - formally the Federal National Mortgage Association - said its June business volume "continued at a strong pace." It bought $20.7 billion of mortgages for securitization or its own portfolio, ahead of the $19.8 billion average of for the first five months but down slightly from May's $21.7 billion.

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