US Bank Profits Reach 6 Year High
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Earnings at US banks rose to a six year high in the third quarter of 2012, with more than half of all banking and financial institutions reporting higher earnings than a year ago, said the Federal Deposit Insurance Corporation on Tuesday.
In the latest sign of economic recovery in the US, banks’ overall revenue rose 3 percent in the third quarter from a year earlier, to $169.9 billion, the largest gain in nearly three years, according to data from the Federal Deposit Insurance Corporation.
Earnings at US banks rose to a six year high in the third quarter of 2012, with more than half of all banking and financial institutions reporting higher earnings than a year ago, said the Federal Deposit Insurance Corporation on Tuesday.
In the latest sign of economic recovery in the US, banks’ overall revenue rose 3 percent in the third quarter from a year earlier, to $169.9 billion, the largest gain in nearly three years, according to data from the Federal Deposit Insurance Corporation.
The revenue growth helped propel the industry to its strongest quarterly performance in six years, as the FDIC revealed in its quarterly report that the nation’s 7,181 banks and thrifts registered Q3 profit of $37.6 billion, up 6.6 percent from a year earlier.
Data from the FDIC also showed that for the first time since 2009, banks were getting a stronger boost to their profit from traditional sources of revenue rather than cutting back on funds set aside for bad loans.
Approximately 57 percent of all banks reported improvements in their quarterly net income from a year ago, while the share of institutions reporting net losses for the quarter fell to 10.5 percent from 14.6 percent a year earlier.
The number of banks on the FDIC’s confidential “Problem List” also fell in the third quarter to 694, or around 9.6 percent of all federally insured banks. That compares with 732 troubled banks in the second quarter.
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Overall lending activity also grew for the fifth time in the last six quarters, with the biggest boost coming from auto, business and home loans.
Bert Ely, a banking industry consultant, told the AP:
[quote] We are seeing the classic recovery from a recession. All of the arrows are pointing in the right direction. [/quote]
Overall, it was “another quarter of gradual but steady recovery” for the US banking system, said Martin Gruenberg, Chairman of the FDIC, but he also cautioned against reading too much into the positive data.
“What we really would like to see is more revenue growth being generated by expanded lending,” he added.
Some of the biggest banks have warned that their earnings are up mostly because they have sold off less profitable businesses, shed loans and reduced headcount – not because of a vibrant economy.
The FDIC also said that there are still some big challenges ahead for the banking industry, notably the US fiscal cliff and economic woes abroad.
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