EARNINGS : NationsBank Leads Surge in Profits for the Industry

Major banks reported big gains in third-quarter earnings Monday, citing the benefits of lower interest rates and early signs that problem-loan difficulties may be easing.

Charlotte, N.C.-based NationsBank Corp., the fourth-biggest U.S. banking company, said third-quarter profit quadrupled to $350 million as the result of rising net interest margins and declining credit problems. Net interest margin is the difference between what a bank charges in interest and what it pays in interest.

No. 6-ranked Chase Manhattan Corp. said net profit rose 29% to $176 million because of better net interest income and record trading revenue.

Shawmut National Corp. of Hartford, Conn., one of the biggest banking companies in New England, said its profit rose to $13 million from $2.3 million a year ago, partly because of progress on “problem assets.”

NationsBank’s quarterly profit equaled $1.40 a share and compared to $81 million, or 31 cents per share, a year ago. The company came into existence late last year with the merger of NCNB Corp. and C&S;/Sovran Corp.

“Credit problems continued to abate, the net interest margin expanded, expenses remained in check and net average loan balances grew for the first time in well over a year,” NationsBank President Hugh McColl said.

Non-performing assets, including problem real estate loans, declined by $68 million to $2.5 billion.

Shareholder equity rose 12% to $7.63 billion, while interest income climbed 8% to $1.06 billion and net interest margin edged up to 4.16% from 3.83%.

NationsBank stock rose 75 cents to $44.75 a share on the New York Stock Exchange.

Chase, the New York money center bank, earned 94 cents a share, up from $136 million, or 79 cents per share, a year ago.

“These results reflect our continuing program of building the strength and quality of our core businesses,” Chase Chairman Thomas Labrecque said.

Provisions against possible loan losses rose to $320 million from $295 million in the third quarter. But net interest revenue rose to $898 million from $863 million, while trading revenue advanced on higher volumes in volatile currency markets.

Chase stocks rose 75 cents to $23.25 a share in NYSE trading.

Meanwhile, Shawmut’s third-quarter income equaled 14 cents a share versus $15.7 million, or 2 cents a share, in the year-earlier period.

“Problem assets dropped by $259 million, or 20%,” Shawmut Chairman Joel Alvord said.

The bank sold $75.4 million worth of residential first mortgages and foreclosed properties to a joint venture consisting of General Electric Co. subsidiary GE Capital and Lehman Bros.

Shawmut stock rose 25 cents to $16.25 a share on the NYSE.