The delinquency rate on bank credit cards dipped in the fourth quarter of 1997 to its lowest level since 1994, according to the American Bankers Association.

Of total card accounts at banks responding to the latest ABA survey, 3.04% were at least 30 days past due. That was down from 3.53% in the third quarter, and 3.72% in the fourth quarter of 1996, which was the record high.

Some economists were heartened by the pronounced improvement in what has been a disturbing indicator of consumer financial health. But others questioned whether credit quality had truly improved. Though the percentage of delinquent accounts decreased, the percentage of dollars in arrears increased for the second quarter in a row, to 5.38%, from 5.31% in the third quarter and 5.24% at midyear 1996.

American Bankers Association chief economist James Chessen said the discrepancy may mean consumers with low credit card balances are paying them off, and those with higher balances are still rolling them over.

The new numbers show "a surprisingly strong downward movement," he maintained. "We want to be careful about saying too much about one quarter's decline, but I think it is a very positive sign."

The trends were not as favorable in some other loan categories the ABA tracks.

Delinquent home equity loans rose to 1.49% in the fourth quarter, from 1.32% in the third and 1.42% at yearend 1996. Mr. Chessen said he was concerned that consumers are converting "short-term credit card obligations into these longer-term home equity products."

The ABA found a higher percentage of delinquencies among direct auto loans-2.29% in the fourth quarter, versus 2.16% in the third. But there was improvement in the indirect loans made through dealers, to 2.46%, from 2.62%.

The ABA's composite of eight types of closed-end loans also sent a mixed message. The percentage of delinquent accounts dropped-to 2.43%, from 2.52% in the third quarter-but the ratio of delinquent dollars rose, to 2.20%, from 2.03%.

Warren Heller, research director of Veribanc Inc., Wakefield, Mass., said the rising dollar figures are troubling, as are growing delinquency rates in categories other than credit cards.

Until recently, "the problems have been pretty much restricted to credit card delinquency, and others have been flat," Mr. Heller said. "This could indicate problems are picking up in other areas of consumer lending."

Michael R. Dean, director of the credit card group at the Fitch IBCA rating agency, said the ABA's fourth-quarter delinquency figure seemed "artificially low." He said banks were busy adding new accounts, and delinquencies from those accounts had not begun to register. Given the larger pool of customers, the percentage of delinquent accounts fell, he said.

Banks were far less eager to book new loans in 1996, Mr. Dean said, when delinquency percentages were higher. The following year, he said, card issuers sent out a record three billion mail solicitations.

James Annable, chief economist at First Chicago NBD Corp., viewed the ABA's findings as "definitely good news. We've always seen the pool of receivables going up, and delinquencies were going up too."

Mr. Annable said card issuers have "really recognized the problem" and changed their lending standards. But credit problems are cyclical, and conditions could change quickly.

"It's not a time to relax or think that the battle has been won," Mr. Annable said. "The real test will be when unemployment begins to rise."

David A. Levy, economist and director of forecasting at the Jerome Levy Economics Institute, Mount Kisco, N.Y., agreed with Mr. Dean's more bearish hypothesis. But he said larger account pools did not tell the whole story, since the portfolios would have had to grow enormously to dwarf the number of delinquent accounts. Lenders spent 1997 "aggressively writing off" subprime loans.

The ABA numbers "do not indicate that consumers are in better shape or that exposure to the delinquencies is lower than before," Mr. Levy said. "This is more of a recognition that some of those delinquencies just weren't going to be paid off."

Mr. Levy sounded the familiar warning that an economic downturn would spell disaster for credit card lenders.

"We're looking at the strongest income growth and the strongest employment we've had in a while-you would expect consumers to be in good shape," he said. "If, as we predict, the economy is going to bog down somewhat, there may be more people joining the ranks of the delinquent."

Mr. Chessen of the ABA said the industry has been realistic, writing off bad consumer loans "pretty steadily" and mitigating risk through securitization.

Mr. Chessen cited a decline in the total revolving credit that banks are extending: $208 billion in January 1998, versus $223.3 billion a year earlier.

"Banks have tightened their consumer lending standards for nine straight quarters, and that's pretty significant," Mr. Chessen said. As a result, "we finally have a strong indication that we've turned the corner on delinquencies."

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