The nation's largest banks are poised to post yet another quarter of double-digit earnings growth, thanks to higher fee income and the effects of cost-reduction programs.

Net income at the biggest banks is expected to rise an average of 11% in the second quarter, according to analyst estimates compiled by First Call Corp., Boston. If banks meet those expectations, this would be the fifth consecutive quarter of at least 10% growth, according to First Call.

In arriving at their profit projections, analysts said banks' investments in such areas as mutual funds, investment banking, and mortgage banking are beginning to pay off, making earnings less dependent on cyclical interest-related sources.

"This is an industry in transition," said Frank J. Barkocy, an analyst at Josephthal & Co. "Earnings have become far less volatile as the dependence on spread income diminishes in favor of fee income."

Meanwhile, the expense lines are being helped by post-merger integrations, new technology, and restructurings.

J.P. Morgan & Co. and Chase Manhattan Corp. both announced staff cuts and streamlining measures in the first quarter that may begin to show an impact in second-quarter results, analysts said. Future quarters could see even more of a benefit from merger-related cost savings, analysts said.

Second-quarter results will be released over the next three weeks.

Several blockbuster mergers were announced in the period but are not scheduled to close until later this year: Citicorp's $70 billion deal with Travelers Group, BankAmerica Corp.'s $60 billion deal with NationsBank Corp., and Banc One Corp.'s $30 billion combination with First Chicago NBD Corp.

Even with the focus on cost reduction, technology spending is expected to tick up in the second quarter as banks prepare for the millennium.

"The only wild card is incremental spending on year-2000," said George Bicher, an analyst at BT Alex. Brown.

Banks with capital markets operations are expected to benefit from a surge in merger and advisory business and trading, analysts said.

But Asian economic trouble could continue to plague institutions like Bankers Trust Corp., Citicorp, Chase, and Morgan that had loan exposure in Korea, Thailand, and Indonesia.

Those four banks have taken steps to scale back their exposure in the troubled Asian markets. As a result, analysts said they do not expect to see as severe an impact on earnings. Bradley Ball of Credit Suisse First Boston said the Asia factor "may not be enough to derail operating earnings."

At home, banks like Norwest Corp., First Union Corp., and NationsBank are expected to reap the benefits of fee income from consumer services.

Minneapolis-based Norwest, the largest mortgage originator, is expected to enjoy robust earnings from the boom in refinancings during the quarter.

The hot mortgage market may not be as positive for the nation's thrifts, which rely more heavily on spreads.

"The shape of the yield curve and narrowing margins will disproportionately affect the thrifts," said Thomas Theurkauf of Keefe, Bruyette & Woods. "They are more vulnerable."

Seattle-based Washington Mutual Inc., for one, has been warning investors that high levels of refinancings during the quarter would dampen its results.

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