Net income rose 62 per cent to $1.17 billion at Chase Manhattan Corp, but its shares dropped $2 to close at $83 in New York Stock Exchange composite trading as investors worried about rising expenses and falling investment banking fees. A big rise in bad loans sent shares of Bank One Corp slipping 25 cents to $59, despite a 23 per cent gain in net income to $1.15 billion, also on the Big Board. But Wells Fargo & Co's shares climbed $1.25 to $42.375 on the Big Board as net income jumped 29 per cent to $884 million.

All three companies benefited to some extent from higher trading profits in the red-hot capital markets, reflecting a trend among larger banks that could quickly reverse if markets turn cold.

"I think everybody is going to step back in the second quarter and ask how long this can continue," saidanalyst Nancy Bush of Ryan Beck & Co Chase's Results Earnings per diluted share at Chase, the nation's third largest bank, rose 65 per cent to $1.32, beating analysts' expectations of $1.25 a share, according to First Call.

The better-than-expected results compared with year-earlier profit of $725 million, or 80 cents a share, and were helped by a 22 per cent rise in profit at Chase's consumer business and benign financial markets. Trading revenue and related net interest income rose 21 per cent to a record $837 million. Securities gains in the quarter totaled $156 million, almost double the amount a year ago.

But the results also contained disappointments. Investment-banking fees fell 12 per cent to $317 million, and operating profit in the Global Services division, which handles securities transactions, trust and custody arrangements, slipped 4 per cent to $114 million. Perhaps most troubling, analysts said, was Chase's 12 per cent expense growth, which outpaced the 10 per cent growth in operatingrevenue.

"That kind of expense performance raises issues of whether they're getting too optimistic too quickly from an expense-management point of view," said Judah Kraushaar, a Merrill Lynch analyst.

Dina Dublon, Chase's chief financial officer, said in an interview that the company is "looking for moderating expense growth for the rest of the year." But she added that the company is "not obsessed" with the relationship between expenses and revenues "being there in each and every quarter." Chase's return on equity rose to 20.6 per cent from 13.8 per cent a year ago, while return on assets rose to 1.3 per cent from 0.78 per cent.

At Bank One, profit compared with year-earlier earnings of $933 million, or 78 cents a share, and climbed on gains from branch sales and the divestiture of a stake in an electronic-payments venture launched by several large banks.

Excluding those one-time gains and restructuring charges relating to the merger last year of Bank One and First Chicago NBD Corp, thenation's fourth-largest bank posted operating results of 88 cents a diluted share, in line with consensus estimates reported by First Call. Driving the operating profit were strong credit-card results and higher capital-markets revenue.

But Bank One revealed an unexpected rise in problem loans. Non performing assets surged 46 per cent to $1.14 billion or 0.74% of total loans, as loans to borrowers in financial services and energy-related businesses soured.

Bank One can ill afford such surprises. The $250 billion-asset bank is under intense scrutiny by analysts skeptical of promises that its merger with First Chicago will reduce annual expenses $930 million and boost annual revenue by $275 million. Bank One said the merger yielded expense savings of $50 million in the first quarter.

With most of the merger gains still in the future, the company is relying almost completely on its huge credit-card business for growth. While net interest income from commercial and consumer lending was essentially flat at$2.3 billion in the first quarter, credit-card revenue surged 36 per cent to $952 million. Return on assets rose to 1.85% from 1.59 per cent, and return on equity climbed to 22.9 per cent from 20.3 per cent.

Strength at Wells Fargo At Wells Fargo, San Francisco, gains on venture-capital investments and sales of mortgages on the secondary markets lifted profit from the year-earlier $684 million, or 41 cents a share. At 53 cents, diluted earnings per share beat Wall Street expectations by three cents, according to First Call.

Formed by the merger last year of Norwest Corp., Minneapolis and the old Wells Fargo, the bank saw venture-capital gains nearly double to $112 million and mortgage banking revenue jump 18% to $327 million. Service charges on deposit accounts, investment management fees, sales commissions on mutual funds, trust account fees and automated teller machine fees all rose, lifting non-interest income 13% to $1.72 billion.

Traditional lending continued to produce slower growth at WellsFargo, as it has at most banks. Net interest income edged up 3.3 per cent to $2.26 billion as total assets at the nation's seventh-largest bank climbed 6 per cent to $201.4 billion. Return on assets rose to 1.8 per cent from 1.51 per cent, and return on equity increased to 17.33 per cent from 14.2 per cent.