BENEFICIAL CORP, 10-Q, 1997-08-08

BENEFICIAL CORP
10-Q, 1997-08-08
PERSONAL CREDIT INSTITUTIONS

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1177

BENEFICIAL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 51-0003820
(State of incorporation) (I.R.S. Employer Identification No.)

301 North Walnut Street
Wilmington, Delaware 19801
(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code: (302) 425-2500

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No

At August 1, 1997, the number of shares outstanding of the registrant's
common stock was 53,175,766.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BENEFICIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, December 31,
1997 1996
ASSETS
<TABLE>
<S> <C> <C>
Cash and Equivalents . . . . . . . . . . . $ 277.4 $ 279.6
Finance Receivables (Note 2). . . . . . . . . 14,585.0 14,672.0
Allowance for Credit Losses (Note 3) . . . . . (505.4) (498.2)
Net Finance Receivables. . . . . . . . . . 14,079.6 14,173.8
Investment Securities (Note 5) . . . . . . . . 575.0 550.3
Property and Equipment. . . . . . . . . . . 204.4 204.9
Other Assets . . . . . . . . . . . . . . 1,663.1 1,722.6

TOTAL ASSETS . . . . . . . . . . . . $16,799.5 $16,931.2

LIABILITIES AND SHAREHOLDERS' EQUITY

Short-Term Debt (Note 6) . . . . . . . . . . $ 4,061.6 $ 4,169.3
Deposits Payable. . . . . . . . . . . . . 620.4 635.0
Long-Term Debt (Note 7) . . . . . . . . . . 8,551.4 8,631.1
Total Interest-Bearing Debt . . . . . . . . 13,233.4 13,435.4
Accounts Payable and Accrued Liabilities. . . . . 644.9 534.0
Insurance Policy and Claim Reserves . . . . . . 1,153.4 1,267.0
Total Liabilities. . . . . . . . . . . . 15,031.7 15,236.4

Shareholders' Equity:
Preferred Stock . . . . . . . . . . . . 114.8 114.8
Common Stock . . . . . . . . . . . . . 53.2 54.0
Additional Capital . . . . . . . . . . . 250.4 305.3
Net Unrealized (Loss) Gain on Investment Securities (0.5) 2.6
Accumulated Foreign Currency Translation Adjustments (44.5) (45.4)
Retained Earnings. . . . . . . . . . . . 1,394.4 1,263.5
Total Shareholders' Equity . . . . . . . . 1,767.8 1,694.8

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . $16,799.5 $16,931.2
</TABLE>
See Notes to Financial Statements.

BENEFICIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)

Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<TABLE>
<S> <C> <C> <C> <C>
REVENUE
Finance Charges and Fees . . . $566.2 $519.2 $1,145.6 $1,064.5
Interest Expense. . . . . . 212.5 198.2 427.2 407.2
Lending Spread. . . . . . 353.7 321.0 718.4 657.3
Insurance Premiums . . . . . 42.8 41.4 88.7 81.5
Other . . . . . . . . . 125.0 121.8 272.3 287.5

Total . . . . . . . . 521.5 484.2 1,079.4 1,026.3

OPERATING EXPENSES
Salaries and Employee Benefits . 108.4 99.6 213.5 201.3
Insurance Benefits . . . . . 16.8 19.8 39.6 42.5
Provision for Credit Losses . . 107.4 80.3 200.5 162.0
Other . . . . . . . . . 155.5 144.9 330.0 296.2

Total . . . . . . . . 388.1 344.6 783.6 702.0

Income Before Income Taxes . . . 133.4 139.6 295.8 324.3
Provision for Income Taxes . . . 45.1 57.2 106.8 134.5

NET INCOME . . . . . . . . $ 88.3 $ 82.4 $ 189.0 $ 189.8

EARNINGS PER COMMON SHARE . . . $ 1.61 $ 1.50 $ 3.41 $ 3.46

DIVIDENDS PER COMMON SHARE . . . $ .52 $ .47 $ 1.04 $ .94
</TABLE>
See Notes to Financial Statements.

BENEFICIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)

Six Months Ended
June 30
<TABLE>
<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income . . . . . . . . . . . . . $ 189.0 $ 189.8
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Provision for Credit Losses . . . . . . . 200.5 162.0
Provision for Deferred Income Taxes . . . . (12.1) (11.7)
Depreciation and Amortization . . . . . . 24.1 23.7
Insurance Policy & Claim Reserves . . . . . (113.6) 17.7
Accounts Payable & Accrued Liabilities . . . 110.9 23.5
Net Cash Provided by Operating Activities. . 398.8 405.0

CASH FLOWS FROM INVESTING ACTIVITIES
Receivables Originated or Acquired . . . . . (6,701.4) (5,503.2)
Receivables Collected. . . . . . . . . . 5,715.9 4,349.2
Receivables Sold Through Securitization. . . . 807.8 1,201.3
Investment Securities Purchased . . . . . . (227.1) (369.9)
Investment Securities Sold . . . . . . . . 155.3 937.5
Investment Securities Matured . . . . . . . 41.3 319.3
Deposit from Reinsurer . . . . . . . . . 80.9 (948.9)
Other . . . . . . . . . . . . . . . (28.1) 41.1
Net Cash (Used in) Provided by Investing Activities (155.4) 26.4

CASH FLOWS FROM FINANCING ACTIVITIES
Short-Term Debt, Net Change. . . . . . . . (86.4) (603.2)
Deposits Payable, Net Change . . . . . . . 26.4 12.3
Long-Term Debt Issued. . . . . . . . . . 1,226.9 926.2
Long-Term Debt Repaid. . . . . . . . . . (1,291.1) (684.7)
Dividends Paid . . . . . . . . . . . . (58.1) (52.4)
Common Stock Repurchased . . . . . . . . (63.3) -- --
Net Cash Used in Financing Activities . . . (245.6) (401.8) (401.8)

NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS . (2.2) 29.6
Cash and Equivalents at Beginning of Period. . . 279.6 273.1

CASH AND EQUIVALENTS AT END OF PERIOD. . . . . $ 277.4 $ 302.7

SUPPLEMENTAL CASH FLOW INFORMATION
Interest Paid . . . . . . . . . . . . $ 421.0 $ 413.9
Income Taxes Paid . . . . . . . . . . . 95.8 119.1
</TABLE>
See Notes to Financial Statements.

BENEFICIAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in millions, except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting policies used in the preparation of the unaudited
quarterly financial statements are consistent with accounting policies
described in the notes to financial statements contained in the
Company's Annual Report on Form 10-K for the year-ended December 31,
1996. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation have
been reflected. Certain prior period amounts have been reclassified to
conform with the 1997 presentation. Interim results are not
necessarily indicative of results for a full year.

2. FINANCE RECEIVABLES

Finance receivables consisted of the following:
<TABLE>
<S> <C> <C>
June 30, December 31,
1997 1996
Receivables Owned:
Real Estate Secured. . . . . . . . $ 5,994.4 $ 6,067.5
Personal Unsecured . . . . . . . . 3,107.8 2,982.9
Credit Cards . . . . . . . . . . 4,358.6 4,595.8
Sales Finance Contracts . . . . . . 925.7 926.3
Commercial. . . . . . . . . . . 198.5 99.5
Total Owned. . . . . . . . . . 14,585.0 14,672.0
Receivables Sold with Servicing Retained
(all real estate secured). . . . . 2,481.4 2,189.0
Total Owned and Serviced. . . . . . . $17,066.4 $16,861.0
</TABLE>

3. ALLOWANCE FOR CREDIT LOSSES

An analysis of the allowance for credit losses follows:
<TABLE>
<S> <C>
1997
Balance at January 1 . . . . . . . . . . . . . $498.2
Accounts Charged Off . . . . . . . . . . . . . (216.8)
Recoveries on Accounts Previously Charged Off . . . . . 28.3
Provision for Credit Losses . . . . . . . . . . . 200.5
Other . . . . . . . . . . . . . . . . . . (4.8)
Balance at June 30 . . . . . . . . . . . . . . $505.4
</TABLE>

4. SERVICING ASSET

On January 1, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." For each servicing contract in existence before January
1, 1997, previously recognized excess servicing assets that do not
exceed contractually specified servicing fees were combined and
recognized as a servicing asset. Previously recognized servicing
assets that exceed contractually specified servicing fees were
reclassified as interest-only strips and are carried at fair value and
amounted to $66.3 at June 30, 1997. Both the servicing asset and the
interest-only strips are included in other assets on the balance sheet.

The activity in the servicing asset is summarized as follows:
<TABLE>
<S> <C>
1997
Balance at January 1 . . . . . . . . . $8.0
Recognized during the period . . . . . . 3.5
Amortization. . . . . . . . . . . . (1.4)
Balance at June 30. . . . . . . . . . $10.1
</TABLE>
The servicing asset is amortized in proportion to and over the
period of estimated net future servicing fee income. The servicing
asset and interest-only strips are periodically reviewed for valuation
impairment. This review is performed on a disaggregated basis for the
predominate risk characteristics of the underlying loans which are loan
type, term, interest rate, prepayment rate and loss rate. The fair
value of the servicing asset and interest-only strip is determined by
the present value of the estimated net future cash flows. The weighted-
average assumptions used in the fair value calculations include:
discount rate - 15%, prepayment rate - 34%, loss rate - 1.4% and
servicing fees - 1.0%. As of June 30, 1997, fair value approximates
carrying value and therefore, no valuation allowance is required.

5. INVESTMENT SECURITIES

Investment securities were as follows:
<TABLE>
<S> <C> <C> <C> <C>
June 30, 1997 December 31, 1996
Carrying Market Carrying Market
Value Value Value Value
AVAILABLE-FOR-SALE
Debt Securities:
Corporate $277.0 $277.0 $275.5 $275.5
Mortgage-backed 27.7 27.7 36.1 36.1
Municipal 5.2 5.2 7.3 7.3
U.S. Government 119.8 119.8 94.3 94.3
Foreign Government 56.4 56.4 42.9 42.9
486.1 486.1 456.1 456.1

Equity Securities .6 .6 .6 .6
Total 486.7 486.7 456.7 456.7

HELD-TO-MATURITY
Debt Securities:
Corporate $ 49.9 $ 49.2 $ 48.9 $ 48.3
Mortgage-backed 2.4 2.3 2.6 2.5
Municipal 10.8 11.1 8.5 8.7
U.S. Government 13.4 13.3 14.4 14.2
Foreign Government 1.1 1.1 1.1 1.1
Other 10.7 10.7 18.1 18.1
Total 88.3 87.7 93.6 92.9

TOTAL INVESTMENT SECURITIES $575.0 $574.4 $550.3 $549.6
</TABLE>
There were no investments transferred from Held-To-Maturity to
Available-For-Sale, nor were there any sales of Held-To-Maturity
investments during the six-month period ended June 30, 1997.

6. SHORT-TERM DEBT

Short-term debt outstanding consisted of the following:
<TABLE>
<S> <C> <C>
June 30, December 31,
1997 1996
Commercial Paper. . . . . . . . . . $3,464.6 $3,695.4
Bank Borrowings . . . . . . . . . . 597.0 473.9
Total . . . . . . . . . . . $4,061.6 $4,169.3
</TABLE>

The weighted average interest rates (including the costs of
maintaining lines of credit) on short-term borrowings during the six
months ended June 30 were as follows:
<TABLE>
<S> <C> <C>
1997 1996
U.S. Dollar Borrowings. . . . . . . . 5.55% 5.52%
Other Currency Borrowings. . . . . . . 5.70 6.45
Overall. . . . . . . . . . . . . 5.57 5.72
</TABLE>
The impact of interest rate hedging activities on the Company's
weighted average short-term borrowing rates and on the reported short-
term interest expense for the six months ended June 30 were increases
as follows: .13% (annualized) and $2.6 in 1997 and .1% (annualized)
and $1.9 in 1996.

7. LONG-TERM DEBT

Long-term debt is shown below in the earliest year it could become
payable:
<TABLE>
<S> <C> <C> <C>
Weighted Average
Interest Rates at June 30, December 31,
Maturity June 30, 1997 1997 1996

1997 6.73% $1,323.4 $2,610.1
1998 7.08 2,074.3 1,982.0
1999 6.77 1,768.4 1,669.7
2000 6.84 982.3 554.9
2001 7.15 707.3 632.4
2002-2006 6.72 1,476.4 984.7
2007-2023 7.63 219.3 197.3
Total 6.89 $8,551.4 $8,631.1
</TABLE>
The weighted average interest rates (including issuance costs) on
the Company's long-term debt during the six months ended June 30 were
as follows:
<TABLE>
<S> <C> <C>
1997 1996
U.S. Dollar Borrowings. . . . . . . . 6.90% 7.11%
Other Currency Borrowings. . . . . . . 6.81 7.15
Overall. . . . . . . . . . . . . 6.89 7.12
</TABLE>
Long-term debt outstanding at June 30, 1997, and December 31,
1996, includes $3,826.4 and $3,815.7, respectively, of variable-rate
debt that reprices based on various indices. Such variable-rate debt
generally has an original maturity of one-to-three years.

The impact of interest rate hedging activities on the Company's
weighted average long-term borrowing rates and on the reported long-
term interest expense for the six months ended June 30 were increases
as follows: .01% (annualized) and $0.4 in 1997 and .07% (annualized)
and $2.8 in 1996.

8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign exchange forward agreements,
options and currency swaps to hedge its net investment in foreign
subsidiaries. At June 30, 1997, the Company had purchased options to
deliver British pounds in exchange for US$207.5, as compared with
December 31, 1996, when the Company owned the right to deliver British
pounds for US$166.0. Concurrently, the Company had sold options to buy
British pounds for US$209.0 at June 30, 1997, as compared with sales of
call options on British pounds for US$166.3 at year-end 1996.

The Company's outstanding forward agreements as of June 30, 1997,
consisted of forward sales of British pounds 144.1 in exchange for
US$232.6 and a forward purchase of DM4.0 in exchange for US$2.3. This
compared to forward sales of British pounds 46.0 and DM38.0 in exchange
for US$71.6 and US$24.7, respectively, at December 31, 1996.

Currency swaps outstanding at quarter-end obligate the Company to
pay DM47.0 in exchange for US$31.1 in September 1998, to pay C$165.0 in
exchange for US$120.4 in July 1999 and to pay C$100.0 in exchange for
US$74.5 in November 2000. There has been no change in currency swaps
outstanding since December 31, 1996. Semi-annual interest payments on
the notional amounts will be made on the swaps.

The Company accrued pretax losses of $2.3 at June 30, 1997, and
pretax losses of $18.5 at December 31, 1996, on open hedges. These
gains and losses represent a mark to spot on all open hedges and are
recognized in a separate component of equity. There were no gains or
losses recognized in net income attributable to the above hedging
programs.

The Company and its subsidiaries utilize interest-rate swaps to
allow it to match fund its variable- and fixed-rate receivables and to
manage basis risk. The amounts to be paid or received under the
agreements are accrued in interest expense consistent with the terms of
the agreements. At June 30, 1997, accrued interest payable related to
these interest-rate swaps totaled $12.0, which is largely offset by
$11.2 of accrued interest receivable. Additionally, foreign
subsidiaries of the Company entered into forward rate agreements
(FRA's) as hedges against variable interest rate exposures. As of June
30, 1997, the subsidiaries had $83.2 of such FRA's whereby they locked
in a weighted average fixed payable rate of 6.67%. These agreements
will all expire in December 1997. There were no FRA's outstanding as
of December 31, 1996. The impact of interest rate hedging activities
on the Company's weighted average borrowing rates and on the reported
interest expense for the six months ended June 30 was an increase of
.04% (annualized) and $3.0 in 1997 and .08% (annualized) and $4.7 in
1996.

The following table summarizes the interest-rate swaps outstanding
at June 30, 1997:
<TABLE>
<S> <C> <C> <C> <C>
Weighted Average Weighted
Notional Interest Rates Average
Amount Pay Receive Maturity*

Pay fixed-rate - receive floating-rate $ 662.2 7.44% 6.53% 2.5
Pay floating-rate - receive fixed-rate
Denominated in
US$ 153.0 5.93 6.51 8.9
British pounds 133.3 7.07 7.95 2.0
Pay floating-rate - receive 865.0 5.84 5.87 0.9
floating-rate
Total $1,813.5 6.52 6.32 2.3

*Remaining term in years.
</TABLE>

9. EARNINGS PER COMMON SHARE

Computations of primary and fully diluted earnings per common
share are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996

PRIMARY EARNINGS
Net Income. . . . . . . . . . $88.3 $82.4 $189.0 $189.8
Dividends on Preferred Stock. . . . (1.3) (1.3) (2.6) (2.6)
Net Income Applicable to Common Stock. $87.0 $81.1 $186.4 $187.2

Weighted Average Shares Outstanding:
Common . . . . . . . . . . 53.1 53.1 53.3 52.9
Common Stock Equivalents . . . . 1.3 1.3 1.4 1.3
Total . . . . . . . . . . 54.4 54.4 54.7 54.2

Primary Earnings per Common Share. . . $1.61 $1.50 $3.41 $3.46

FULLY DILUTED EARNINGS
Net Income. . . . . . . . . . $88.3 $82.4 $189.0 $189.8
Dividends on Non-Convertible
Preferred Stock . . . . . . . (1.2) (1.2) (2.5) (2.5)
Net Income Applicable to Common Stock. $87.1 $81.2 $186.5 $187.3

Weighted Average Shares Outstanding:
Common . . . . . . . . . . 53.1 53.1 53.3 52.9
Common Stock Equivalents . . . . 1.7 1.5 1.7 1.6
Total . . . . . . . . . . 54.8 54.6 55.0 54.5

Fully Diluted Earnings per Common Share. $1.59 $1.49 $3.39 $3.44
</TABLE>

10. RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<S> <C> <C>
Six Months Ended
June 30

1997 1996
Net Income. . . . . . . . . . . . . $189.0 $189.8
Add Provision for Income Taxes . . . . . . 106.8 134.5
Earnings Before Income Taxes . . . . . 295.8 324.3

Fixed Charges:
Interest and Debt Expense . . . . . . . 427.2 407.2
Interest Factor Portion of Rentals . . . . 12.5 11.2
Total Fixed Charges . . . . . . . . 439.7 418.4

Earnings Before Income Taxes and Fixed Charges $735.5 $742.7

Ratio of Earnings to Fixed Charges . . . . 1.67 1.78

Preferred Dividend Requirements. . . . . . $ 4.3 $ 4.3

Ratio of Earnings to Fixed Charges and Preferred
Dividend Requirements . . . . . . . . 1.66 1.76
</TABLE>
In computing the ratio of earnings to fixed charges, earnings
consist of net income to which has been added income taxes and fixed
charges. Fixed charges consist principally of interest on all
indebtedness and that portion of rentals considered to represent an
appropriate interest factor. Preferred dividend requirements are
grossed up to their pretax equivalent.

11. CONTINGENT LIABILITIES

In July 1992, the Internal Revenue Service (IRS) completed its
examination of the Company's federal income tax returns for 1984
through 1987 and proposed certain adjustments that relate principally
to activities of the Company's former subsidiary, American Centennial
Insurance Company (ACIC), prior to its sale. The Company sold its
entire interest in ACIC in May 1987. The IRS has proposed, among other
items, $142.0 in adjustments relating to 1986 and 1987 ACIC additions
to loss reserves. In order to limit the further accrual of interest on
the proposed adjustments, the Company paid $105.5 of tax and interest
during the third quarter of 1992.

Within administrative appeals process, all but two issues were
resolved. Both of the remaining unresolved issues relate to the 1986
and 1987 ACIC additions to loss reserves. During the third quarter of
1996, the IRS issued a statutory Notice of Deficiency asserting the
unresolved adjustments and increased the disallowance to $195.0.

The Company's management and independent tax advisers continue to
believe that the IRS's proposed adjustments are unlikely to be
sustained. The Company fully intends to oppose the adjustments through
litigation in the United States Tax Court. While the conclusion of
this matter cannot be predicted with certainty, management does not
anticipate the ultimate resolution to differ materially from amounts
accrued. Resolution is not expected to occur within one year.

The Company is involved in various other claims and lawsuits
incidental to its business. In the opinion of management, the claims
and suits in the aggregate will not have a material adverse effect on
the Company's consolidated financial statements.

BENEFICIAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Financial Condition

Reflecting the sale by subsidiaries of the Company of $808 million
of variable-rate home equity lines of credit through a securitization
in the capital markets in May 1997, the Company's leverage (the ratio
of interest-bearing debt to total equity) was reduced to 7.49 times at
June 30, 1997, from 7.61 times at March 31, 1997 and 7.93 times at year-
end 1996.

Impacted largely by the securitization, total owned finance
receivables declined $87 million, or 1% during the first half of 1997,
compared with a decline of $202 million, or 2% during the first half of
1996. Managed receivables, which include loans sold with servicing
retained, increased $205 million this year compared with an increase of
$651 million in the prior year. Removing the foreign exchange
translation impact in both years, managed gains were $295 million in
this year's first half compared with $676 million in the prior year
period. Managed receivable growth in the North American consumer
finance subsidiaries was $431 million during the first half of 1997
compared with a gain of $321 million in 1996. Reflecting the
anticipated paydown of certain maturing same-as-cash portfolio tranches
at Beneficial National Bank USA (BNB USA), the Company's private label
credit card subsidiary, experienced runoff of $311 million in the 1997
period compared with a gain of $296 million during the first half of
1996. Including the remaining balance of receivables serviced from
prior securitizations, total receivables sold with servicing retained
were $2,481 million at June 30, 1997, compared with $1,966 million at
June 30, 1996.

At June 30, 1997, the allowance for credit losses was $505.4
million or 3.47% as a percentage of owned finance receivables compared
with $494.5 million or 3.35% at March 31, 1997, and $498.2 million or
3.40% at December 31, 1996. At the June 30, 1997 level, the reserve
covered annualized net chargeoffs 1.34 times, compared with 1.57 times
at December 31, 1996. As a percentage of average owned receivables,
annualized first-half net chargeoffs were 2.57%, compared with 1.98% in
the first half of 1996. Continuing the trend of recent quarters,
chargeoffs reflect a higher proportion of higher-yielding unsecured
loans in the overall portfolio as compared to last year, the continuing
expected maturing of the BNB USA private-label credit card portfolio,
as well as higher chargeoffs in the personal unsecured loan portfolio.
Though up from 1996 for the quarter and the half, the second quarter
chargeoff rate on personal loans declined from the first quarter of
1997. As a percentage of average managed receivables, first half net
chargeoffs were 2.25% versus 1.80% in 1996.

As disclosed in the table that follows, all owned receivables
delinquent two months and greater on a contractual basis increased to
3.89% of total outstandings at June 30, 1997, from 3.50% a year earlier
and 3.38% at the end of 1996. The increase reflects primarily higher
delinquency rates on the credit card portfolio. On a managed basis,
delinquency increased to 3.68% at June 30, from 3.30% a year earlier
and 3.20% at December 31, 1996. The table that follows details
delinquency by product type on both an owned and managed basis.
<TABLE>
<S>
<C> <C> <C> <C> <C> <C>
Delinquency % on a Delinquency % on an
Managed Basis Product Type Owned Basis
June 30, Dec. 31, June 30, June 30, Dec. 31, June 30,
1997 1996 1996 1997 1996 1996
2.63% 2.13% 2.48% Real Estate Secured 2.74% 2.17% 2.66%
5.87 5.81 5.84 Personal Unsecured 5.87 5.81 5.84
4.03 3.23 3.07 Credit Card 4.03 3.23 3.07
3.81 3.62 3.18 Sales Finance 3.81 3.62 3.18
3.68 3.20 3.30 Overall 3.89 3.38 3.50
</TABLE>

During the first half of 1997, approximately 973 thousand shares
of common stock were repurchased by the Company at an average price of
$65.10 and placed in treasury as part of the 1.2 million share
repurchase program approved by the Board of Directors in November 1996.
These repurchases were the primary cause of the reduction in additional
capital during the first half of 1997.

Results of Operations

Second quarter 1997 net income increased to $88.3 million from
$82.4 million in the second quarter of 1996. The 1996 second quarter
included $18.1 million aftertax profits from the tax refund
anticipation loan (RAL) business and a $14.8 million aftertax gain
relating to securitization. The 1997 quarter included RAL profits of
$2.9 million aftertax and a $21.5 million aftertax gain relating to
securitization. The 1997 quarter also benefited from the gain on the
sale of the Central National Life Insurance Company of Omaha's (CNL)
ordinary life portfolio of $4.7 million aftertax and a $5.4 million tax
benefit from the utilization of a capital loss relating to the German
subsidiary. Excluding these items from both years, 1997 second quarter
aftertax earnings from the remainder of the Company's business
increased 9% as compared with the 1996 quarter.

Net income for the first half of 1997 decreased slightly to $189.0
million from $189.8 million during the first half of 1996. 1996's
first half included RAL profits of $66.4 million aftertax and a $8.4
million aftertax gain related to the sale of the Beneficial Insurance
Group's annuity block. The first half of 1997 included RAL profits of
$45.0 million aftertax. Removing the impact of the one-time items in
both years, as well as all gains relating to securitizations and RAL
earnings, the earnings of the remainder of the Company's business
increased 12% in the first half of 1997 as compared with the first half
of 1996. This was largely due to improved earnings at BNB USA and a
lower effective tax rate. The improvement in BNB USA earnings was due
to favorable first quarter results in the special financing portfolio
and increased late fees. During the second quarter, BNB USA and Costco
Companies, Inc., a national membership warehouse club, renewed
negotiations for the continuation of the current private-label program.
If this renegotiation is unsuccessful, the relationship will conclude
by the end of 1997.

Lending spread increased $32.7 million or 10% for the second
quarter and $61.1 million or 9% for the first six months from 1996. As
a percentage of average owned receivables, the lending spread of 9.65%
in the second quarter of 1997 decreased from 9.72% in the prior year
second quarter and decreased from 9.85% to 9.81% for the first half of
1997. The gross yield as a percentage of average owned receivables
fell to 15.45% from 15.72% in the quarter and to 15.64% from 15.96%
during the first half of 1997. However, interest expense was also
lower, declining to 5.80% and 5.83% for the quarter and the half,
versus 6.00% and 6.11% in 1996. Higher margins at BNB USA were offset
by reduced spreads in the other North American consumer finance
subsidiaries.

During the second quarter, other revenue increased $3.2 million or
3% to $125.0 million from 1996, as the reduction in RAL revenue was
more than offset by higher securitization revenue, which includes
excess servicing income, corresponding to a higher level of serviced
receivables, and the gain on the sale of the ordinary life portfolio.
For the first half of 1997, other revenue decreased $15.2 million or
5%, reflecting the reduction in RAL earnings and the prior year annuity-
related capital gains.

Removing the impact of the $7.3 million gain on the sale of the
ordinary life portfolio, second quarter 1997 insurance pretax earnings
increased 19% to $24.9 million from $20.9 million in the prior year
quarter. Removing the ordinary life sale in 1997 and the annuity-
related aftertax gain of $8.4 million in 1996, first half insurance
pretax profits of $47.6 million increased 27% from the prior year.
These results reflect strong premium revenues and lower loss ratios,
corresponding to the improved internal growth in insurance sold through
the consumer finance subsidiaries. The Company continues to runoff the
non-affiliated independent credit business.

Subsidiaries outside the United States contributed $22.8 million
in pretax earnings in the first half of 1997, a decrease of $1.7
million or 7% from 1996. The unfavorable earnings comparisons with
1996 were primarily in the German operation, which reported a $2.4
million and a $4.3 million loss for the quarter and year to date,
respectively, compared to break even results in the 1996 periods.

Reflecting the significant increase in net chargeoffs as a
percentage of average owned receivables, and the increase in the
average receivable base, the provision for credit losses increased 34%
to $107.4 million in the second quarter and 24% to $200.5 million in
the first six months in comparison with the same periods in 1996. As
an annualized percentage of average owned receivables, first-half net
chargeoffs rose to 2.57% of the portfolio from 1.98% in the first half
of 1996. From a product line perspective, the increase in chargeoff
rates were most evident in personal unsecured loans, which increased to
5.07% during the first six months of 1997 from 4.30% a year earlier,
and in the credit card portfolio, which rose to 4.32% from 3.46% during
the first six months of 1996.

Both trends reflect the continued high levels of consumer
bankruptcy in North America. The increase in the credit card chargeoff
rate also reflects the maturing of BNB USA's private-label credit card
portfolio, which is within expectations. Management expects chargeoffs
in the credit card portfolio to continue to increase as the portfolio
matures. In addition, the personal unsecured chargeoff rates, as well
as the credit card chargeoff rates, will continue to reflect the
economic cycle and the economic health of the consumer.

Salaries and other operating expenses in total increased 7.8% and
9.2% during the second quarter and first half of this year compared
with 1996. Increased marketing expenses and new business development
initiatives account for the majority of the increase in operating
expenses. Relating these operating expenses to average owned
receivables generates an operating expense ratio of 7.42% during the
half compared with 7.46% in the 1996 first half. As a percentage of
average managed receivables, the first-half operating expense ratio
declined to 6.51% from 6.72% a year earlier.

The effective tax rate was 36% for the first half of 1997 versus
41% in 1996. In addition to the aforementioned utilization of a
capital loss relating to the German subsidiary, the lower rate also
reflected more efficient overall utilization of foreign tax credits.
The full year tax rate is also expected to be below the 1996 rate of
39%.

Changes in Cash Flow and Liquidity

The principal sources of cash are collections of finance
receivables, proceeds from the issuance of short- and long-term debt,
and cash provided through operations, including maturities and
repayments of its receivables. The monthly collections of cash
principal as a percentage of average receivables averaged 6.50% in the
first half of 1997, compared with 5.44% in the first half of 1996.

Substantial additional liquidity is available through committed
bank lines that the Company maintains in support of its commercial
paper borrowings and through long-term borrowings through both private
and public debt offerings. Also, subsidiaries of the Company sell, from
time to time, home equity loans through securitizations in the capital
markets.

The principal uses of cash are loans to customers, repayments of
maturing debt, dividends to shareholders, and general operating needs.

Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share."
SFAS No. 128 simplifies the computation of earnings per share (EPS) and
requires dual presentation of basic and diluted EPS by entities with
complex capital structures. The statement is effective for financial
statements issued for periods ending after December 15, 1997. The
Company does not expect the diluted EPS presentation to differ
significantly from the current primary EPS.

The consolidated financial statements and related notes should be
read in conjunction with the preceding review.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company and its subsidiaires are named as
parties to various legal proceedings resulting from its activities in
the ordinary course of business. These legal proceedings may be
purported class actions or individual actions. At this time there are
no such proceedings which the Company believes would have a material
adverse impact on its financial condition.

As widely reported in the media, there are industry related
circumstances which may impact the Company and its subsidiaries. These
circumstances involve (1) the substantial volume of litigation brought
by the Alabama plaintiffs' bar against banking, consumer finance and
insurance companies operating in the state, (2) the large punitive
awards obtained from juries in that state, and (3) the failure of the
Alabama Supreme Court to reverse many of those awards. Like other
companies in these industries, a subsidiary of the Company is involved
in a number of lawsuits in Alabama, most of which relate to the
financing of satellite television broadcast receiver dishes, a business
the Company's subsidiary discontinued in 1995. These cases generally
allege inadequate disclosure of financing terms. In nearly all cases,
other parties are also named as defendants or have been brought in as
defendants pursuant to cross-claims. Unspecified compensatory and
punitive damages are sought. The judicial climate in Alabama is such
that the outcomes of each of these cases are unpredictable. Certain of
these cases have been settled for nominal amounts that in the aggregate
are not material to the Company. With respect to the pending cases,
the Company and its subsidiary believe the subsidiary has substantive
legal defenses to the claims asserted and is defending each case
vigorously.

Item 4. Submission of Matters to a Vote of Security Holders.

The Company held its annual meeting of stockholders on May 22,
1997. The matters voted on at the meeting were: (1) the election of
directors and (2) the ratification of the selection of Deloitte &
Touche LLP as independent auditors of the Company for 1997.

All of the nominees for director were elected and the results were as
follows:
<TABLE>
<S> <C> <C> <C>
Votes Votes Against Abstentions and
For or Withheld Broker Non-Votes

Callander, Robert J. 50,058,572 264,841 13
Caspersen, Finn M.W. 50,051,157 272,256 13
Clark, Robert C. 49,983,868 339,545 13
Coleman, Leonard S., Jr. 50,061,059 262,354 13
Farris, David J. 50,062,951 260,462 13
Gilliam, James H., Jr. 50,065,501 257,912 13
Halvorsen, Andrew 50,064,992 258,421 13
Hernandez, Roland A. 50,066,404 257,009 13
Hillier, J. Robert 50,057,041 266,372 13
Holm, Gerald L. 50,062,931 260,482 13
Kean, Thomas H. 50,063,004 260,409 13
Muller, Steven 50,057,112 266,301 13
Ross, Susan Julia 50,061,373 262,040 13
Tucker, Robert A. 50,045,206 278,207 13
Wachter, Susan M. 50,063,625 259,788 13
Watts, Charles H., II 50,053,905 269,508 13

On the ratification of the selection of Deloitte & Touche LLP, the
results were as follows:

Votes for: 50,209,367
Votes against or withheld: 33,359
Abstentions: 80,700
Broker Non-Votes: 0
</TABLE>

Item 6. Exhibits and Reports on Form 8-K.

a) Exhibits -

Exhibit
Number Exhibit

3.1 Copy of the Company's Restated Certificate of Incorporation,
as amended, is incorporated by reference to Exhibit 3.1 of the
Annual Report on Form 10-K for the year ended December 31,
1994.

3.2 Copy of the Company's By-Laws, as amended, is incorporated by
reference to Exhibit 3.2 of the Annual Report on Form 10-K for
the year ended December 31, 1990.

10 Copy of Beneficial Corporation Key Employees Stock Bonus Plan,
as amended.

27 Financial Data Schedule (in EDGAR filing only).

b) The Company filed the following report on Form 8-K during
the period covered by this Form 10-Q:

1) A report on Form 8-K, dated April 24, 1997 was filed
relating to the Company's first-quarter earnings, which were
announced on April 24, 1997.

BENEFICIAL CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

Date August 7, 1997 /s/ Ronald E.Bombolis
Ronald E.Bombolis
Sr. Vice President
and Controller
(Chief Accounting
Officer)

Date August 7, 1997 /s/ Andrew C. Halvorsen
Andrew C. Halvorsen
Member of the Office
of the President and
Director (Chief
Financial Officer)

EXHIBIT INDEX

Exhibit
Number Exhibit

3.1 Copy of the Company's Restated Certificate of Incorporation,
as amended, is incorporated by reference to Exhibit 3.1 of the
Annual Report on Form 10-K for the year ended December 31,
1994.

3.2 Copy of the Company's By-Laws, as amended, is incorporated by
reference to Exhibit 3.2 of the Annual Report on Form 10-K for
the year ended December 31, 1990.

10 Copy of Beneficial Corporation Key Employees Stock Bonus Plan,
as amended.

27 Financial Data Schedule (in EDGAR filing only).

Employee Benefit Plan
Key Plan
Plan Document

BENEFICIAL CORPORATION

KEY EMPLOYEES STOCK
BONUS PLAN

1. Purposes

The purposes of the Beneficial Corporation Key Employees
Stock Bonus Plan are (a) to encourage key employees of the
Company and its subsidiaries to continue to devote their best
efforts to the business of the Company by rewarding such
employees for services which contribute to the success of the
enterprise and fostering among them an increased ownership
interest in the Company, and (b) to attract persons of
outstanding ability to executive positions with the Company and
its subsidiaries.

2. Definitions

The terms used in the Plan shall have the following
meanings:

(a) "Account" means the account of a Participant as
described in Section 5(b) hereof.

(b) "Award" means an award under the Plan made by the
Committee pursuant to Section 6 hereof.

(d) "Beneficiary" means the person or entity designated by
a Participant in writing in a form approved by the Committee to
receive a distribution of an Award in case of the death of a
Participant prior to the distribution of an Award, provided that
such designation is in effect at the time of death of such
Participant.

(e) "Board" means the Board of Directors of Beneficial.

(f) "Committee" means the Compensation Committee of the
Board or any committee which is a successor thereto.

(g) "Employee" means any person who is employed on a
permanent basis by and receives a regular salary from the Company
or a Participating Subsidiary, other than a person whose
customary employment with such company is less than twenty hours
per week.

(h) "Participating Subsidiary" means any Subsidiary that
is designated by the Board to participate in the Plan.

(i) "Participant" means any Employee who has received an
Award. A person shall remain a Participant until all securities,
cash and other property in his Account have been distributed or
forfeited under Section 7 hereof.

(j) "Plan" means the Beneficial Corporation Key Employees
Stock Bonus Plan as set forth herein and as from time to time
amended.

(k) "Stock" means the Common Stock of Beneficial.

(l) "Subsidiary" means any corporation the stock of which
possessing at least 80 percent of the total combined voting power
of all classes of voting stock and comprising at least 80 percent
of the total number of shares of any other class of stock is
owned by Beneficial and/or one or more other Subsidiaries.

(m) "Trust" means the trust as described in Section 5(a)
hereof.

(n) "Trustee" means the trustee as described in Section
5(a) hereof.

3. Administration of the Plan

(a) The Committee shall have the full power and authority
to administer and interpret the Plan. The Committee may from
time to time adopt such rules, regulations, forms and agreements,
not inconsistent with the provisions of the Plan, as it may deem
advisable to carry out the Plan. All Committee determinations
with respect to the Plan shall be final, binding and conclusive.

(b) The Committee may, in its discretion, delegate record
keeping, ministerial and similar administrative duties with
respect to the Plan to any person. However, the Committee may
not delegate its authority to apply or interpret the provisions
of, or make determinations specified in, Sections 4, 6 and 7
hereof.

(c) Committee members shall not be eligible, nor shall
they have been eligible at any time within one year prior to
their appointment to the Committee, to participate in the Plan
or in any other plan of the Company or any of its affiliates
under which such member has been eligible for selection on
a discretionary basis as a person to whom stock of Beneficial
or any of its affiliates, or stock options or stock appreciation
rights in respect thereof, may be awarded.

4. Eligibility

To be eligible to receive Awards for any calendar year an
Employee shall have been employed at any time during such year by
Beneficial or any Participating Subsidiary, except as provided at
Section 6(d) below. An Employee who is eligible to receive an
Award for any year may receive an Award for services rendered in
such year, even though the Award is made during the following
year and the Employee is not eligible to receive an Award for
services rendered in such following year.

5. Trust Agreement

(a) Beneficial shall enter into an agreement with a bank or
other institutional trustee selected by Beneficial for the
purpose of creating an irrevocable trust in which contributions
to the Plan shall be held. The Trustee shall at all times have a
combined capital and surplus of at least $5,000,000. Any stock,
cash or other property held in the Trust that was contributed by
Beneficial, other than stock, cash or other property to the
extent Beneficial has been reimbursed therefor by a Participating
Subsidiary, or that was received with respect to any unreimbursed
contribution by Beneficial, shall at all times be subject to the
claims of those general creditors of Beneficial whose claims are
not satisfied because of the bankruptcy or insolvency of the
Company; provided, however, that Beneficial's obligations to pay
Awards under this Plan shall be unconditional regardless of the
availability of assets held under the Trust. Any Stock, cash or
other property, held in the Trust that was contributed, or
reimbursed to Beneficial, by any Participating Subsidiary or that
was received with respect to any such contribution or
reimbursement by the Participating Subsidiary, shall at all times
be subject to the claims of those general creditors of such
Participating Subsidiary whose claims are not satisfied because
of the bankruptcy or insolvency of such Participating Subsidiary;
provided, however, that each Participating Subsidiary's
obligations to pay Awards under this Plan shall be unconditional
regardless of the availability of assets held under the Trust.

(b) The Trustee and/or the Company will create and maintain
a separate Account for each Participant. The Trustee shall
credit a Participant's Account with (i) the number of shares of
Stock awarded to the Participant or purchased with cash awarded
to the Participant and any cash remaining after such purchase,
(ii) the number of shares of Stock purchased with any cash
dividend paid on the Stock held in the Participant's Account and
any cash remaining after such purchase, (iii) the number of
shares of Stock received as stock dividends or stock splits with
respect to the shares of Stock in such Account and (iv) warrants
or any other property received with respect to the Stock in such
Account. The Trustee shall debit a Participant's Account to
reflect any distributions or forfeitures with respect to the
Participant under Section 7 below. Stock that is contributed to
the Plan for any year and Stock that is purchased by the Trustee
with the contributions of the Company or a Participating
Subsidiary for such year shall each be separately allocated to
the Accounts of the Participants on a pro-rata basis based on the
Participant's respective Awards for such year. Any Trust assets
distributed by the Trustee to the general creditors in bankruptcy
or insolvency of Beneficial or any Participating Subsidiary shall
be debited to the Accounts of the Participants on a pro-rata
basis based on the value of the Participants' respective Accounts
that is attributable to contributions made by such corporation at
the time of such distribution.

(c) The Trustee and/or the Company shall maintain records
for each Account showing (i) the aggregate number of shares of
Stock so credited and debited, (ii) the number of shares of Stock
which are awarded or purchased for each calendar year during
which the Plan is in effect, (iii) the Account investments apart
from such shares of stock, (iv) the Account balance, and (v) such
other matters as the Trustee and/or the Company may deem
necessary or advisable.

(d) No fractional share shall be purchased for or credited
to the Account of any Participant.

(e) Unless otherwise provided by Beneficial, the Trustee
shall have custody of the certificate or certificates
representing all the shares of Stock held in the Trust under the
Plan. The Trustee shall register such certificate or
certificates in its own name or in the name of a nominee of the
Trustee.

(f) The power of Beneficial to determine the period during
which any person shall serve as Trustee and the power to remove
any such person at any time shall be exercised by Beneficial in
accordance with the directions of the Committee. Subject to the
provisions of the Plan, the agreement with the Trustee shall
contain such other provisions as Beneficial shall deem
appropriate.

6. Annual Awards

Awards will be made on the following basis:

(a) At each November meeting of the Board in a calendar
year during which the Plan is in effect, the Board shall make a
preliminary determination regarding the maximum percentage of the
consolidated net after-tax income, if any, of the Company and its
Subsidiaries for that year which may, in the Committee's
discretion, be contributed to the Plan for such year and at the
meeting of the Board held the following February shall make a
final determination regarding such maximum percentage. The
maximum percentage for any such year shall not exceed 5% of the
net after-tax income, if any, of the Company and its Subsidiaries
for such year, computed on a consolidated basis in accordance
with generally accepted accounting principles; provided, however,
that for the purpose of calculating such net income, there shall
not be taken into account (i) the after-tax cost to the Company
of the contribution to the Plan for such year, and (ii)
extraordinary or unusual nonrecurring items that are realized
otherwise than in the ordinary course of trade or business as
determined by the Committee (e.g. gains or losses resulting from
the sale of a Subsidiary). The Board shall also determine, at
its February meeting referred to above in this paragraph (a),
whether the contribution shall be in cash or Stock or partly in
cash and partly in Stock, in which case the Board shall specify
the percentage to be contributed in cash and Stock, respectively.

(b) As soon as practicable following the public
announcement of the Company's consolidated financial results for
each calendar year during which the Plan is in effect, the
Committee shall determine (i) the dollar amount of the
contribution to the Plan for such calendar year, subject to the
maximum percentage of net after-tax income determined by the
Board pursuant to the provisions of paragraph (a) of this Section
6; (ii) which Employees from among those eligible shall receive
an Award for such year; and (iii) the portion of the annual
contribution for such year that is allocable to each Participant.
The Committee shall determine the amount of each Award based on
the performance of each eligible Employee and such other factors
as it may determine to be appropriate. Upon the request of the
Committee the Executive Committee of the Board shall furnish to
it such information regarding the performance of eligible
Employees as the Committee shall deem necessary and appropriate.

(c) If after the determinations set forth in paragraph (b)
of this Section 6 have been made, but within the same calendar
year, the Committee determines in its discretion that additional
Awards are appropriate to Employees included among those
determined at Section 6(b)(ii) above, based solely upon such
Employees' exceptional performance during the calendar year for
which the Award is made, it may grant such Awards subject to the
maximum percentage of net after-tax income determined by the
Board pursuant to the provisions of paragraph (a) of this Section
6, with such limitation applied collectively to all Awards under
Section 6 (b), (c) and (d) hereof. Such additional awards are to
be granted only in unusual circumstances where information
regarding Employees' performance was not available or fully
measurable when the determinations set forth in paragraph (b) of
this Section 6 were made.

(d) If after the determinations set forth in paragraph (b)
of this Section 6 have been made, but within the same calendar
year, the Committee determines in its discretion that additional
Awards are appropriate to Employees not included among those
determined at Section 6 (b) (ii) above by virtue of their not
having been employed at any time during the year for which the
determinations at paragraph (a) of this Section 6 were made, and
where such Awards are a part of the total compensation package to
such Employees necessary to attract and induce them to accept
employment with the Company or its subsidiaries, it may grant
such Awards subject to the maximum percentage of net after-tax
income determined by the Board pursuant to the provisions of
paragraph (a) of this Section 6, with such limitation applied
collectively to all Awards under Section 6 (b), (c) and (d)
hereof. The Committee shall designate with respect to any Awards
granted pursuant to this paragraph (d) the period over which they
shall vest, which period may exceed, but in no event be shorter
than the period over which the earliest award granted during such
calendar year pursuant to Section 6 (b) hereof shall vest.

(e) As soon as practicable after the Awards pursuant to
paragraphs (b), (c) and (d) of this Section 6 are determined,
Beneficial shall transfer the corresponding contributions to the
Trustee. The contributions shall be made, in whole or in part,
as determined by the Board pursuant to the provisions of
paragraph (a) of this Section 6, in cash or Stock, which Stock
shall consist of treasury shares (whether or not acquired for
purposes of the Plan). The value of any Stock contribution shall
be determined by the Committee based on the mean between the high
and the low price for a share of Stock on the New York Stock
Exchange (consolidated trading) on the last day for which price
quotes are available preceding the date on which such
contribution is transferred to the Trustee.

(f) As soon as practicable after the Trustee receives (i)
any cash awarded to a Participant or (ii) any cash dividend paid
on Stock held in a Participant's Account, the Trustee shall use
such cash (and any other cash then in the Participant's Account)
to buy in one or more transactions the largest practicable whole
number of shares of Stock for such Account (which may include
purchases of Stock executed on a national securities exchange)
after deductions for the payment of brokers' fees and stock
transfer and similar taxes, if any, applicable to such purchases.
The Trustee shall limit the daily volume and prices of such
purchases as required by regulations of the Securities and
Exchange Commission, if applicable, and otherwise to the extent
it deems necessary or advisable.

(g) Upon (i) the distribution of Stock, cash or other
property from the Account of a Participant who was an Employee of
a Participating Subsidiary during the year for which the Award
was made to which such Stock, cash or other property relates, or
(ii) the payment of such Stock, cash or other property by
Beneficial directly to a Participant pursuant to Section 7(h)
hereof, such Participating Subsidiary shall pay to the Company an
amount equal to the fair market value of such Stock, cash or
other property as of the date of such distribution or payment.
The determination of such fair market value shall be made by the
Committee and, with respect to Stock, shall be based on the mean
between the high and the low price of a share of Stock on the New
York Stock Exchange (consolidated trading) on the last day for
which price quotes are available preceding the date of such
distribution or payment.

7. Vesting and Payment of Awards

(a) Except as provided in Section 7(b) hereof, Stock in a
Participant's Account shall vest in the Participant at the
earliest to occur of the following:

(i) January 1 of the 5th calendar year following the
year for which such Stock was awarded, provided that this event
of vesting shall not apply to Awards pursuant to Section 6 (d)
hereof; or

(ii) the date on which the Participant ceases to be
employed by the Company or a Subsidiary, if such termination of
employment is on account of death, total disability, a discharge
at the direction of the Company or a Subsidiary (other than a
discharge for cause) or a termination of employment under
circumstances which would entitle the Participant to a
continuation of compensation and benefits for a period of time
following such termination pursuant to the terms of an agreement
entered into between the Participant and the Company or a
Subsidiary providing for such a continuation in limited instances
following a change in control of the Company (as defined in or as
otherwise construed for purposes of such agreement). For
purposes of the foregoing, a total disability shall be defined in
accordance with Section 10.03 (or any successor provision) of
Beneficial's Retirement Plan and a "discharge for cause" shall be
defined in accordance with Section 8.04 (or any successor
provision) of such Plan; or

(iii) with respect to Awards granted pursuant to
Section 6 (d) hereof, the date designated by the Committee upon
which such Awards were to vest.

(b) Distributions of Stock (whether through a Stock split
or Stock dividend) or other property on Stock in a Participant's
Account, and Stock purchased with any cash dividend paid on Stock
in his Account, shall vest in the Participant as of the date the
Stock with respect to which the cash, Stock or other property was
received vests under Section 7(a) or 7(d) hereof.

(c) If a Participant ceases to be employed by the Company
or a Subsidiary other than (i) as provided in clause (ii) of
Section 7(a) above, or (ii) by reason of retirement on or after
January 1 of the calendar year in which the Participant attains
age 60 at a time when the Participant is eligible to retire early
pursuant to Section 4 of the Beneficial Corporation Pension Plan
dated October 1, 1983, as amended, and before Stock is vested
under clause (i) or (iii) of Section 7(a) above or Section 7(b)
hereof, as the case may be, the Participant shall thereupon
forfeit his interest in such Stock and in any cash or property
then in his Account that was received with respect to such Stock.
Any Stock, cash or property forfeited hereunder shall be returned
to the Company.

(d) Any Award made prior to November 12, 1992, if not
already vested under Section 7(a) hereof, and if not previously
forfeited under Section 7(c) hereof, shall vest in the
Participant on January 1 of the calendar year in which the
Participant attains age 60.

(e) Except as provided in Section 7(f) below, as soon
practicable after a Participant acquires a vested interest in any
of the shares of Stock or other property held in his Account, the
Trustee shall distribute the same to the Participant.
Distribution shall be made to the Participant or, if deceased, to
his surviving Beneficiary or Beneficiaries or to his estate if he
has not named a Beneficiary who has survived him.

(f) A Participant may elect to defer receipt of all, but
not a portion, of any interest in his Account in which he will
become vested during a particular calendar year, until a specific
date following the date such interest will become vested, but not
for a period extending beyond the fifth anniversary of such date.
An election to defer the receipt of an Award, and any
distributions in respect of such an Award, or any Stock purchased
with cash dividends paid on such an Award, must be made in the
year prior to the year to which such Award relates. The election
shall be made in writing, shall be irrevocable, and shall be in
such form as the Committee may designate.

(g) Beneficial and/or a Participating Subsidiary may
impose such requirements for the payment of withholding or other
taxes in connection with the distribution of any Stock, cash or
other property in a Participant's Account as such corporation
shall determine to be necessary or appropriate prior to any
distribution.

(h) In the event that Stock, cash or other property in a
Participant's Account is withdrawn therefrom solely to satisfy,
in whole or in part, claims of a judgment creditor of Beneficial
against such corporation, Beneficial shall be obligated to ensure
that such Participant shall nevertheless receive an equivalent
amount of Stock, cash and/or other property, if any, that he
would have received, and at the time or times at which such
receipt would have occurred hereunder, had there been no such
withdrawal of assets. At the option of Beneficial, such
obligations may be discharged by the making of a further
contribution of the requisite amount and type of assets to such
Participant's Account in substitution for the assets so
withdrawn, or by payment from Beneficial directly to such
Participant.

(i) Each Participant shall be entitled to designate one or
more persons or entities to be a Beneficiary or Beneficiaries
hereunder, and to revoke or otherwise change at any time any such
designation. No such designation, revocation or change shall be
effective until received by the Committee on a form which it has
approved for such purpose.

(j) Notwithstanding anything herein to the contrary, if
for any calendar year which ends on or after December 31, 1997
a Participant is classified as a "Covered Employee" for purposes
of Section 162(m) of the Internal Revenue Code of 1986 (or the
corresponding provisions of any future U.S. internal revenue law)
(the "Code"), then the award, if any, which may be made pursuant
to the Plan to such Participant with respect to such
Participant's performance during 1993, in accordance with the
provisions of Section 6, and credited pursuant to Section 5
(b)(i) of the Plan, together with any shares of stock or other
rights credited pursuant to Section 5 (b)(ii), (iii) or (iv) of
the Plan with respect to such award (the "Award"), shall,
notwithstanding Section 7 (e) of the Plan not be distributable to
such Participant, though earlier vested pursuant to Section 7(a)
of the Plan, prior to the earliest to occur of the following:

(i) the first business day of the year following the
year in which such Participant's employment with the Corporation
shall have terminated for any reason, or

(ii) the last business day of any succeeding year in
which such Participant shall not be so classified as a "Covered
Employee", or

(iii) the last business day of any succeeding year
in which such Participant's "applicable employee
remuneration", computed pursuant to Section 162(m)(4) of the Code
without regard to the Award, shall not exceed $1,000,000,
provided, however, that if termination of employment pursuant to
subparagraph (i) above is under circumstances which would entitle
the Participant to continuation of compensation and benefits
following a change of control within the meaning of Section 7
(a)(ii) of the Plan, such distribution shall occur as soon as
practicable after such termination, and provided further that the
portion of any Award which shall become distributable pursuant to
subparagraph (iii) above shall be limited to an amount sufficient
to cause the Participant's "applicable employee remuneration" for
such year (but not exceed) $1,000,000. Any shares of stock or
other rights credited pursuant to Section 5 (b) (i), (ii), (iii)
or (iv) of the Plan with respect to such Award shall remain,
until distributed to such Participants, held as assets of the
trust created pursuant to Section 5 (a) of the Plan and in
accordance with Section 5 (e) of the Plan, and shall in all
respects remain fully subject to the claims of those general
creditors of the Corporation or its Participating Subsidiaries
whose claims are not satisfied because of the bankruptcy or
insolvency of the Corporation or Participating Subsidiaries
pursuant to such Section 5(a) of the Plan. Any such Award shall
otherwise be administered in accordance with the provisions of
the Plan, including without limitation the vesting and forfeiture
provisions of Section 7 of the Plan, and the voting and offer to
purchase provisions of Section 8 of the Plan.

(k) Notwithstanding anything herein to the contrary, if for
any calendar year which ends on or after December 31, 1998 a
Participant is classified as a "Covered Employee" for purposes of
Section 162(m) of the Internal Revenue Code of 1986 (or the
corresponding provisions of any future U.S. internal revenue law)
(the "Code"), then the awards, if any, made in accordance with
the provisions of Section 6, and credited pursuant to Section 5
(b)(i) of the Plan, to such Participant on or after March 21,
1994 (and not previously distributed), together with any shares
of stock or other rights credited pursuant to Section 5 (b)(ii),
(iii) or (iv) of the Plan with respect to such awards (the
"Subsequent Awards"), shall, notwithstanding Section 7 (e) of the
Plan not be distributable to such Participant, though earlier
vested pursuant to Section 7(a) of the Plan, prior to the
earliest to occur of the following:

(i) the first business day of the calendar year
following the year in which such Participant's employment with
the Corporation shall have terminated for any reason, or

(ii) the last business day of any calendar year ending
on or after December 31, 1999 in which such Participant shall not
be so classified as a "Covered Employee", or

(iii) the last business day of any calendar year
ending on or after December 31, 1999 in which such Participant's
"applicable employee remuneration", computed pursuant to Section
162(m)(4) of the Code without regard to the Awards, shall not
exceed $1,000,000,

provided, however, that if termination of employment pursuant to
subparagraph (i) above is under circumstances which would entitle
the Participant to continuation of compensation and benefits
following a change of control within the meaning of Section 7
(a)(ii) of the Plan, such distribution shall occur as soon as
practicable after such termination, and provided further that the
portion of any Subsequent Awards which shall become distributable
in any particular year pursuant to subparagraph (iii) above shall
be limited to an amount sufficient to cause the Participant's
"applicable employee remuneration" for such year (including any
amount distributable pursuant to Section 7 (j) hereof) to equal
(but not exceed) $1,000,000 (such Subsequent Awards to be
distributed in the order awarded, with the full amount of any
earlier-granted Subsequent Award distributed prior to any
distribution of any later-granted Subsequent Award). Any shares
of stock or other rights credited pursuant to Section 5 (b) (i),
(ii), (iii) or (iv) of the Plan with respect to such Awards shall
remain, until distributed to such Participants, held as assets of
the trust created pursuant to Section 5 (a) of the Plan and in
accordance with Section 5 (e) of the Plan, and shall in all
respects remain fully subject to the claims of those general
creditors of the Corporation or its Participating Subsidiaries
whose claims are not satisfied because of the bankruptcy or
insolvency of the Corporation or Participating Subsidiaries
pursuant to such Section 5(a) of the Plan. Any such Awards shall
otherwise be administered in accordance with the provisions of
the Plan, including without limitation the vesting and forfeiture
provisions of Section 7 of the Plan, and the voting and offer to
purchase provisions of Section 8 of the Plan.

8. Voting Rights; Offer to Purchase Stock

Each Participant shall have the right and shall be afforded
the opportunity to instruct the Trustee how to vote the shares of
Stock held in his Account. The Trustee shall vote any shares of
Stock for which it does not receive instructions in the same
proportions on each matter to be voted upon as the shares for
which the Trustee does receive instructions. In the event any
offer is made to shareholders of the Company generally by any
person, corporation or other entity (the "Offeror") to purchase
any or all of the Company's outstanding Stock, including the
Stock then held in Participants' Accounts, then and in that event
the Trustee shall promptly forward to each Participant all
materials and written information furnished to the Trustee by the
Offeror and/or by the Company in connection therewith, and shall
notify each Participant in writing of the number of shares of
Stock which is then credited to such Participant's Account. Such
notice shall also set forth the rights afforded each Participant
by the following sentence and shall state that, absent timely
instructions from such Participant to the Trustee, no tender to
the Offeror shall be made of any of the shares specified in such
written notice. Each Participant shall be entitled to
confidentially instruct the Trustee as to whether all (but not
less than all) of the shares of Stock standing to his credit
should be tendered by the Trustee pursuant to such offer. The
Trustee shall tender only those shares of Stock held in a
Participant's Account for which it receives instructions to so
tender from such Participant, and shall not tender any shares as
to which such instructions are not so received. In the event
that Stock held in a Participant's Account is tendered pursuant
to this section, the proceeds received upon the acceptance of
such tender by the Offeror shall be credited to such
Participant's Account (and shall be subject to the same terms and
conditions as were applicable to the Stock so tendered). Pending
the distribution of such proceeds pursuant to Section 7 hereof,
the Trustee shall invest any cash portion of such proceeds in
such short-term or intermediate-term obligations issued or
guaranteed by the Government of the United States or any agency
or instrumentality thereof, and in such commercial paper (other
than obligations of the Company), certificates of deposit and
other investments of a short-term or intermediate-term nature, as
the Trustee, in its discretion, deems suitable for the investment
of trust funds.

9. Non-alienation of Benefits

No right, benefit or payment under the Plan shall be subject
to anticipation, sale, assignment, pledge, encumbrance, or charge
by any Participant or any Beneficiary thereof. Any attempt by a
Participant or such Beneficiary to anticipate, sell, assign,
pledge, encumber, or charge the same shall be void. If any
Participant or Beneficiary hereunder should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge any right or benefit or payment hereunder, then such
right, benefit or payment, in the sole discretion of the
Committee, shall be forfeited. In the absence of a designated
Beneficiary, the right of a Participant to receive a distribution
hereunder shall be transferable only by will or the laws of
descent and distribution.

10. Effective Date of Plan

The Plan shall become effective for the calendar year ending
on December 31, 1982, subject to approval, in accordance with
Beneficial's By-laws, of the holders of the outstanding shares of
the capital stock of Beneficial having ordinary voting power for
the election of directors of Beneficial, other than stock having
such power only by reason of the happening of a contingency, and
the receipt of any governmental approvals or rulings which the
Company determines to be appropriate.

11. Amendment of Termination of the Plan

(a) The Board may amend, suspend or terminate any or all of
the provisions of the Plan at any time, except that, without
prior approval, in accordance with Beneficial's By-laws, of the
holders of the outstanding shares of the capital stock of
Beneficial having ordinary voting power for the election of
directors of Beneficial, other than stock having such power only
by reason of the happening of a contingency, no amendment may be
made that will (i) increase the maximum amount that may be
contributed to the Plan for any year under Section 6(a) hereof,
or (ii) accelerate in any way the vesting requirements, or change
the forfeiture provisions, under Section 7 above.

(b) Any amendment, suspension or termination of the Plan
shall not adversely affect the rights of Participants to Awards
theretofore made, except to the extent, if any, required to
obtain governmental approvals or rulings which the Company
determines to be appropriate.

05/18/88 - Stockholder approval of Key Employees Stock Bonus
Plan.

05/19/88 - Board of Directors approved provision for
confidential voting.

02/08/89 - Board of Directors authorized changes to 6(a) and
6(c) re-timing of setting percentages.

11/12/92 - Board of Directors authorizes changes to 6(c) and
7 removing acceleration of vesting at age 60
provisions.

02/01/94 - Adopted as of 2/01/94. Amended to restrict certain
1993 awards to senior executives as to date first
eligible for distribution.

03/21/94 - Amended to restrict 1994 and subsequent executives
as to date first eligible for distribution.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENT OF INCOME (BOTH DATED 6/30/97) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 277
<SECURITIES> 0<F1>
<RECEIVABLES> 14585
<ALLOWANCES> 505
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 522<F3>
<DEPRECIATION> 317<F3>
<TOTAL-ASSETS> 16799
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 8551<F4>
0
115
<COMMON> 53
<OTHER-SE> 1600<F5>
<TOTAL-LIABILITY-AND-EQUITY> 16799
<SALES> 0
<TOTAL-REVENUES> 1507<F6>
<CGS> 0
<TOTAL-COSTS> 427<F7>
<OTHER-EXPENSES> 583<F8>
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 0<F9>
<INCOME-PRETAX> 296
<INCOME-TAX> 107
<INCOME-CONTINUING> 189
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189
<EPS-PRIMARY> 3.41
<EPS-DILUTED> 3.39
<FN>
<F1> CURRENT MARKETABLE EQUITY SECURITIES ARE NOT SEPARATELY STATED.
<F2> DO NOT PREPARE CLASSIFIED BALANCE SHEET.
<F3> PP&E PER BALANCE SHEET (204.4) IS SHOWN NET OF DEPRECIATION.
<F4> LONG-TERM DEBT PER BALANCE SHEET.
<F5> INCLUDES ADDITIONAL CAPITAL (250.4), NET UNREALIZED LOSS ON INVESTMENT
(-0.5), FOREIGN CURRENCY TRANSLATION ADJ (-44.5), AND RETAINED EARNINGS
(1394.4) PER BALANCE SHEET = 1599.8.
<F6> INCLUDES FINANCE CHARGES AND FEES (1145.6), INSURANCE PREMIUMS (88.7) AND
OTHER REVENUE (272.3) PER INCOME STATEMENT = 1506.6.
<F7> INTEREST EXPENSE PER INCOME STATEMENT.
<F8> INCLUDES SALARIES AND BENEFITS (213.5), INSURANCE BENEFITS (39.6) AND
OTHER (330.0) PER INCOME STATEMENT = 583.1.
<F9> COMPANY'S PRIMARY COST OF GENERATING REVENUE IS INTEREST EXPENSE
WHICH IS INCLUDED IN TOTAL COSTS (ABOVE).
</FN>

</TABLE>