Consumer loans at the nation's top 100 retail banks grew a slim 3.6% in 1991, well off their average growth rate of 10.8% in the past five years, according to American Banker's annual consumer lending roundup.

The results are sobering since consumer lending is widely viewed as the major engine of revenue growth for most banks. However, the data are not surprising.

Consumer lenders said the slowdown, reflected a recession that kept unemployment high and consumers wary about taking on new debt.

Indeed, the year was highlighted by the first decrease in installment credit in 33 years, according to statistics from the Federal Reserve Board.

The lead bank subsidiaries of BankAmerica Corp., Citicorp, and Wells Fargo & Co. retained their positions as the top three lenders last year. (For details on the top 300 domestic banks in consumer lending, see tables beginning on page. 8.)

However, Wells' loan total dropped almost 10% year over year, while Bank of America and Citibank saw slight gains, 5.6% and 2.2%, respectively.

Total outstanding consumer loans at the top 100 banks rose to $385.3 billion, from $371.8 billion in 1990.

Home Equity Loan Growth

One of the few bright spots for bankers continues to be home equity loans, which are still the fastest-growing area of consumer credit. This category grew 20.6%, to $35.2 billion outstanding at the top 100 consumer banks.

But credit card balances outstanding at all banks insured by the Federal Deposit Insurance Corp. grew just 4.1%. That was up from 1.5% growth in 1990, and the 1991 figure would have been higher if banks had not continued their aggressive securitization of credit card loans to get them off their books.

Student loans, single-payment, and installment loans at the top 100 banks edged down 0.2% in 1991 - the first time since 1958 that installment credit had shrunk. At all banks insured by the FDIC, installment credit declined 6.3%, compared with 0.7% growth in 1990.

Moreover, the near-term outlook remains gloomy.

Consumer Credit Falls in April

The Fed this week said consumer credit fell 6.3% in April, the third consecutive monthly contraction in consumer borrowing and the biggest drop since June 1980.

Nevertheless, all consumer loans - including first and second mortgages, credit card debts, auto loans, and personal loans - grew to make up 39.9% of the top 100 banks' loan portfolios last year, from 37.8% in 1990.

To keep that share growing, bankers said they are putting their marketing muscle where demand lies - in home equity lending.

For example, Key Bank of New York, the nation's 14th-largest consumer lender, offers home equity loans at the prime rate, 6.5%, for the first year.

Consumer Mania

"People are just running to get it," said Sergio Amitrano, executive vice president in charge of consumer lending at the KeyCorp subsidiary.

Added Richard C. Hartnack, vice chairman of Union Bank in San Francisco: "Originations for home equities are at record levels. It's still the best consumer borrowing product around." Union Bank is a subsidiary of Bank of Tokyo.

Consumers are flocking because home equity loans are made at relatively low interest rates and are the last form of credit to retain tax deductibility. The American Bankers Association says 43% of all commercial banks offered home equity lines of credit in 1991.

Even the ballooning home equity market will deflate, bankers conceded, however.

End to Growth Seen

Mr. Amitrano commented: "I see the home equities definitely continuing to grow but certainly not at the same growth rate because you're going to have a mature product.

For the time being, though, Key Bank's consumer loan portfolio is thriving, having grown 33.15% last year. This dramatic rise reflects some unusual one-time events, however. For example, Key merged three regional New York banks into one last year and also bought assets from two large New York thrift holding companies.

First Union National Bank of Florida similarly saw its consumer loan portfolio jump 60.24% last year, largely because of its acquisition of Southeast Banking Corp. And subsidiaries of the Fleet Financial Group, which absorbed Bank of New England's units, boosted their retail holdings at a rapid pace.

Fleet's flagship bank in Providence, R.I., saw its consumer outstandings rise 108%, to $2.4 billion, at the end of 1991, from $1.1 billion a year earlier.

Bank of America leads all in the U.S. banking pack with a $36.15 billion consumer loan portfolio, even before its merger with Security Pacific National Bank, the fourth-largest consumer lender last year.

Citibank, which for the third year in a row is second to Bank of America in the consumer loan derby, with a $28.8 billion portfolio, does not seem perturbed by its runner-up status.

"We're not trying to grow assets on our books," said a Citicorp spokeswoman. Indeed, she pointed out, the company regularly repackages many of its loans as securities.

Chairman John Reed told analysts last year that Citicorp does not need to be the biggest bank holding company, as long as it is "No. 1 or No. 2 in each of our main businesses" - consumer banking, international banking, and corporate lending.

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