Ratings of U.S. banks will diverge more sharply as the current cycle of improved earnings for banks draws to an end, according to the credit rating agency IBCA Inc.

"The past two years have been very positive for banks, and ratings moved in unison upward," said Mark Gross, an IBCA senior vice president. "We'll be more selective, and it's going to be more company-specific."

Changes in strategic focus and more volatility in earnings have made rating banks increasingly complicated. From now on, ratings will depend much more on "who's got the right strategy and who screws up," he said.

Citicorp, for example, is currently viewed as a global consumer bank. J.P. Morgan & Co. and Bankers Trust New York Corp. are seen as investment banks. Chase Manhattan Corp. has a threefold focus: national consumer products, consumer banking, and global wholesale operations.

Bank of New York Co. has become a regional retail bank with strong processing, credit card, and factoring businesses, and Chemical Banking Corp. has turned itself into a major force in middle-market lending and wholesale syndications.

Among other large U.S. banking companies, Banc One Corp. is emerging as the most regional of regional banks; Norwest Corp. has turned into an all- purpose finance company, and NationsBank Corp. is converting itself from a mainly retail and middle-market bank into a classical money-center conglomerate.

Analysts at other agencies sound a similar note.

"Any upgrades will be quite selective and will probably go to those banks that will be the winners in a kind of Darwinian struggle over consolidation," said Tanya Azarchs, a U.S. bank analyst at Standard & Poor's Corp.

Observers cite several factors for their growing pessimism about banks' ratings over the last few quarters, including pressure on return on equity, difficulties in improving return on assets, lower net interest margins, and continued high operating expenses.

According to data compiled by IBCA for the top 41 U.S. banks, the mean return on average assets in the first quarter this year was 1.17%, up only slightly from the 1.14% recorded in the same quarter of 1994 and down from its recent high, in the third quarter, of 1.21%.

Average net interest margin fell to 4.15% in the first quarter, from 4.31% in the same quarter the year before, while the ratio of noninterest expense to net revenues remained unchanged, at 65%, in the quarter compared with the 1994 period.

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