Despite this week's parade of generally upbeat earnings reports, Wall Street analysts are beginning to predict a sharp setback in 1996.

On Thursday, the fears centered on Fleet Financial Group as four analysts downgraded earnings estimates for the Rhode Island banking company. Three analysts also cut their investment ratings.

The results reflected concerns about Fleet's net interest margin and a jump in loan delinquencies. But analysts said similar concerns could quickly spread beyond Fleet to other banks with better results.

Reflecting these concerns, most bank stocks retreated on Thursday despite a rising market. The banks in the Standard & Poor's index fell 0.78%, compared with a rise of 0.31% for the overall S&P.

"Banks have some challenges over the next couple of years," said Thomas Theurkauf, an analyst with Keefe, Bruyette & Woods Inc., New York, who cut his rating on Fleet from "attractive" to "hold."

"The common wisdom is that lower rates are good for banks, but I am not sure that is true anymore," he added. "Consumer rates are already very low, and as asset yields come down, that will pinch the net interest margins even further."

The new pressure on bank stocks may have been intensified by a Wednesday report on CNBC, the cable television business channel, by commentator Dan Dorfman.

Mr. Dorfman warned his listeners of deteriorating credit quality at banks and narrowing net interest margins. Banks in the S&P 500 stock index had risen nearly 4% the preceding day and a half to that point.

"The story here is, don't bank, not for very long that is, on bank stocks, up 40% last year on average. Maybe in 1996 (they'll be) duds," the influential market reporter said.

Fundamental concerns about Fleet's results prompted Dean Witter Reynolds Inc. analyst Anthony Davis to drop his recommendation on the stock to "neutral" from "accumulate." Though bullish on the stock long term, he said the bank will have trouble in the first half of 1996.

Shares of Fleet fell 25 cents to $39.75, as volume surged to more than three times the daily average of 685,000 shares.

The decline came despite the company's announcement on Wednesday that it would sell its troubled Fleet Finance unit, which has been rocked in recent years by charges that it discriminated against minority borrowers.

Analysts applauded the planned sale, saying it would remove a trouble spot for Fleet and allow it to focus on integrating Natwest and Shawmut National Corp.

However, analysts remain concerned about Fleet's basic business prospects.

Fleet's loan growth in the fourth quarter was anemic, Mr. Davis said, while the net interest margin lost 12 basis points from the third quarter. And when excluding loan transfers from Fleet Finance, nonperforming assets at Fleet rose 6% in the fourth quarter, he said.

The bank is restructuring its balance sheet to make way for the acquisition of Natwest Bancorp., a move that will narrow the margin, analysts said.

As a result, Mr. Davis lowered his 1996 earnings estimate 8%, to $4.15 per share.

Meanwhile, Gerard Cassidy of Hancock Institutional Equity Services lowered his estimate of Fleet's results by 5%, to $4.35.

Also, Oppenheimer & Co. cut the bank to "market performer" from "buy." The firm's bank analyst, Christopher Kotowski, declined to comment on the action.

Fleet may not be alone, however, in the troubles it is expected to encounter this year. Though bank stocks ran up on Tuesday and Wednesday on what seemed to be strong fourth-quarter earnings, some observers say those returns were boosted by stock buybacks and low loan-loss provisions.

"Core earnings were weak," said Linda Stromberg, a bank analyst with M.R. Beal & Co., New York. "There is no solid loan demand going into this next year, which many are predicting a recession for."

Of course, many bulls still rage in the bank stock sector.

Lehman Brothers analyst Michael L. Mayo is predicting strong earnings growth for the next two years, and Morgan Stanley & Co.'s Dennis Shea attributed Thursday's market dropoff to profit taking, and not to worries about fundamentals.

Still, investors are expressing reservations about the sector. When BankAmerica Corp. released earnings Wednesday the stock enjoyed a nice boost from what seemed like strong results.

"But when we really started looking into the BankAmerica numbers, some of the trends were not that encouraging, like the credit cycle deteriorating and pressure on the margins," said Scott Edgar, an analyst with Sife Trust Fund. BankAmerica's shares were unchanged.

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