Nonbanks up another notch in card loan outstandings.

Nonbanks have gained more ground against banks in the intensely competitive credit card business, the annum American Banker card industry survey indicates.

Of the nation's top 50 credit card programs, 13 are owned by nonbanks and are gamering an ever-increasing market share.

The nonbank group, which includes Dean Witter Reynolds, Discover & Co., AT&T Corp., and Household International, accounted for 29.8% of the top 50's total card loans as of March 31. This percentage is up from 27.7% the year before and 24.2% in 1992.

Though increased competition from nontraditional players is hardly new to the credit card industry, it c6ntinues to be perhaps the most important strategic issue facing bank issuers, experts said.

"Nonbanks continue to be very influential," said Ronald I. Mandle, an analyst with Sanford C. Bernstein & Co.

"'By reduction in fees by Citicorp [which is by far the nation's largest credit card lender] and lower pricing on cards in general are primarily due to the competition from others, especially the in-bank issuers," Mr. Mandle said.

The list of the fastest-growing credit card players for 1993 was headed by Dallas-based First USA Inc., one of the card-issuing specialists that is not affiliated with a conventional commercial bank.

First USA, which. also operates one of the nation's largest merchant-services businesses, saw a 114% growth in its receivables portfolio in the year that ended March 31.

For the purposes of the American Banker survey, the term "portfolio" refers to credit card loans outstanding and on the books, plus securitized credit card loans outstanding.

Five other nonbank companies joined First USA on the list of the 10 fastest growers. These included Prudential Insurance Co. of America, AT&T, and Advanta Corp.

Signet Banking Corp. of Richmond, Va., recorded the largest portfolio growth among bank holding companies, at 107%. The card business' success - its over $6.6 billion in managed loans generate about 70% of Signet's total earnings convinced the bank recently to spin off the card unit.

Signet is in the process of assembling an initial public offering for the new unit, to be known as Oakstone Financial Corp.

But the news is not as good for all traditional bank issuers. Of the eight. companies in the top 50 that showed a decline in their portfolio, only one -American Express Co. - is a nonbank.

The most prominent banking companies on this list are Chase Manhattan Corp., which owns the fourth-largest card portfolio, and BankAmerica Corp., which ranks eighth.

While Chase saw its portfolio shrink by only 0.04%, BankAmerica's fell 7.9%. Other losers included National City Corp. (8.55%) and Wells Fargo & Co. (2.79%).

Some of these decliners can attribute the slippage to internal maneuverings. For instance, SunTrust Banks Inc., which showed a decline of 11.88%, is in the midst of a far-reaching consolidation that has temporarily hampered its ability to gather new business.

However, observers attributed the losses in market share by some of the largest card banks to a lack of aggressiveness in an era that demands it. The card banks need to match or at least address the low-rate and no-fee products that many nonbanks are using as stepping stones to the top of what remains one of banking's most profitable lines of business.

This point of view is supported by the fact that many of the card banks losing market share do not appear on the RAM Research Corp. lists of the lowest rate and fee offers.

"Price is still one of the primary ways to compete," said William Westervelt, a principal at First Annapolis Consulting.

Experts said many of the institutions that had taken their card profits for granted in the past are in the process of reacting to the new forms of competition. As such, large portfolio gains are expected from the likes of Citicorp and Bank of America in the coming 18 months.

Likewise, some of the smaller regional players are also expected to hone their approach to the business in the coming year.

"The advantage that regionals have over their [nonbank credit card] competitors is their close banking relationship with their customers," said Richard T. Robida, executive vice president at Speer & Associates in Atlanta.

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