A Few New Blots On The Ledger

Delinquent consumer loans and skinny margins may temper an otherwise bully year

It was beginning to look as if the good times would never end for U.S. banks. Since 1991, profits have set record after record, asset quality has sharply improved, and bank stocks have seemed headed for the moon. But now, a few clouds are dotting the horizon. Consumers are beginning to have trouble with heavy debt burdens. And the narrow gap between short- and long-term rates bodes ill for banks' profit margins on loans and investments. Although Merrill Lynch & Co. predicts that profits for 56 top banks should grow 9.8% in 1996 (chart), pan in for a closeup and the picture is murkier.

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