Financial institutions are reaping the rewards of their increased emphasis on investment products, a survey has found.

Profit margins on retail investment sales averaged 28% of revenues last year, up from 25% in 1996, the ABA Securities Association reported Thursday. The trade group based its findings on a survey of 1,088 banks, thrifts, and credit unions.

Meanwhile, the ranks of full-time investment representatives at the companies participating in the survey totaled 20,400. That is up 46% from the survey conducted two years ago.

The survey is far from definitive-for instance, it did not disclose the actual amount of revenues banks are generating from investment sales. Nevertheless, such surveys do provide useful performance benchmarks in what is still a relatively new business for banks.

"You can really do a checkup on whether you are doing the right things and whether there are institutions doing better than you," said Stephen M. Angelis, president of CCB Investor Services, a unit of CCB Financial Corp., a $8 billion-asset banking company in Durham, N.C.

The improved profit margins reflect the growing maturity and increased efficiency of banks' retail investment sales programs, said Larry P. LaRocco, managing director of ABA Securities.

"There is more knowledge on how to do this, and it's spreading," Mr. LaRocco said. Banks that got an early start in the business have smoothed the path for those that have followed, he said.

Profit margins were strongest at small banks-those with less than $250 million of assets-which reported an average of 30%. The largest-with more than $1 billion of assets-reported average profit margins of 25%.

Growing volume has helped pump up margins, said David W. Dunning, executive vice president at National City Corp.'s full-service brokerage, Private Investment Advisers.

"The public is becoming more comfortable with doing investment business at a bank," Mr. Dunning said. "Our salespeople are becoming much more proficient in identifying wealthier customers. The more experienced you are, you are going to become better at what you do."

At Private Investment Advisers, he said, profit margins for the first four months of 1999 are running at 36%.

Some observers cautioned that the profit margin figures should not be relied upon too heavily, because coming up with profitability benchmarks is a tricky business.

For instance, banking companies differ in their approach to allocating expenses associated with investment sales. If some expenses are absorbed by the parent company instead of the brokerage, for instance, brokerage profits can appear larger than they really are.

The 28% profit margin cited by ABA Securities Association "sounds healthy. The problem is everything in this market is healthy," said Dennis J. Gallant, a consultant with Cerulli Associates Inc. in Boston.

Making comparisons to the brokerage industry at large is also difficult. "How you can compare yourself to traditional brokerage firms, of which many have a large institutional segments? That's going to skew things," Mr. Gallant said.

Banks' expanding retail sales forces could help to boost revenues and profits further.

Mr. Angelis of CCB Financial has hired 10 sales assistants and plans to add five more this year to support a full-time sales force that is growing from 30 to 38 investment representatives.

"The assistants take a lot of administrative burden off the reps' shoulders," Mr. Angelis said. "I decide to add sales assistants, with the expectation-and it has proved correct so far-that it will increase my revenue substantially more than the cost."

Profit margins in CCB's retail brokerage have exceeded 40% for the past three years, he said.

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