National City Corp. plans to sharply increase fee income from 36% of revenue to as much as 50%, a top official said.
"We feel it's important to push from interest-sensitive [revenues] to fee income," William R. Robertson, deputy chairman of Cleveland-based National City, said in an interview last week.
Mr. Robertson said National City has no timetable for increasing its fee income.
He added that if National City's lending business blossomed, he would be happy for the percentage of revenues from fees to remain steady.
But Mr. Robertson explained that Cleveland-based National City was eager to diversify into businesses unaffected by problem loans and volatile rates.
Mr. Robertson's comments echoed those of other industry players.
"We believe that banks will continue to seek fee income as a replacement for volume," Salomon Brothers wrote in a recent report on banks' transaction processing businesses.
In the report, Salomon estimated that a third of the banking industry's total revenues are from fees. But only a small number of institutions get more than half of their revenues from fee-based services.
A Force in Processing
National City is already one of the largest players in transaction processing. Its National Processing Company unit, in Louisville, Ky., pulled in revenues last year of $167 million, mostly from check processing and clearing credit card transactions.
In 1991, National City pulled in another $94.7 million of trust fees, $91.8 million from deposit charges, $77.4 million from credit card charges, and $37.1 from mortgage processing.
Growth in fee income is expected to run about 10% to 12% annually, Mr. Robertson said. Profits in fee businesses now total about 25% of revenues.
Forecast of Annual Growth
According to Salomon Brothers, National City's net interest income will likely grow by 7% to 10% annually over the next five years, meaning that by 1996, about 40% of its revenues would come from fees.
Mr. Robertson acknowledged that National City will have to make acquisitions to receive 50% of revenues from fees.
Its recent purchase of check authorizer JBS Associates, Ringwood, N.J., is an example of the kind of acquisition the bank is interested in.