Household International Inc., seen as the most likely contender to buy finance company Beneficial Corp., increased its net income more than 27% in 1997, to $686.6 million, according to an annual report filed last week.

The company, based in Prospect Heights, Ill., also increased its home equity receivables more than 38%, to $11.06 billion, largely because of its acquisition of Transamerica Corp.'s consumer finance subsidiary.

Household's managed assets grew by the end of 1997 to $51.9 billion, from $48.1 billion a year earlier, while owned assets increased to $30.3 billion, from $29.6 billion.

During the year, the company dumped student lending after selling its $900 million portfolio and entered the subprime auto business with its purchase of ACC Consumer Finance Corp.

Household, which is ranked third behind Beneficial Corp. and Associates First Capital Corp. in number of branches, stands to gain the most from buying Beneficial, some analysts said. The Delaware finance giant put itself on the block in February, and a deal is expected to be announced this month. Household, with 644 branches, needs Beneficial's presence to put it in competition with Associates First Capital Corp., the Dallas consumer finance leader. Associates has 1,464 branches nationwide.

In addition, Beneficial's fit with Household "is strategically more compelling than with any other acquirer," said Mark Alpert, analyst at BT Alex. Brown.

Before current chief executive officer William F. Aldinger joined in 1994, the management team at Household had reduced retail branches significantly, Mr. Alpert said. Household once had about 2,000 branches.

One of Mr. Aldinger's goals has been to increase Household's branch presence to 1,500, Mr. Alpert said. "He can only open up 50 or 60 per year de novo. Acquisitions are a core part of their strategy."

Household's receivables growth has not been very strong, Mr. Alpert noted, in part because the company has been concentrating on the Transamerica acquisition. "They need to focus on growing revenues," he said, "but they need Beneficial," he added.

The impending sale has Beneficial employees worried about their jobs, a stop at the company's message board on the Internet site YahooFinance reveals.

American General Finance, GE Capital Corp., and U.S. Bancorp are among the companies rumored to be bidding for Beneficial.

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