US Banks Post Highest Profits Since 2006
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U.S. banks posted their 12th straight quarterly profit in the last three months of 2012, a 37 percent increase from a year ago, reaching their highest level in six years as banks continued to expand lending.
U.S banks earned $34.7 billion in the last three months of 2012, up from $25.4 billion a year ago and the highest for a fourth quarter since 2006, the Federal Deposit Insurance Corporation revealed on Tuesday.
U.S. banks posted their 12th straight quarterly profit in the last three months of 2012, a 37 percent increase from a year ago, reaching their highest level in six years as banks continued to expand lending.
U.S banks earned $34.7 billion in the last three months of 2012, up from $25.4 billion a year ago and the highest for a fourth quarter since 2006, the Federal Deposit Insurance Corporation revealed on Tuesday.
Sixty percent of banks reported improved earnings in the quarter, bolstered mainly by increases in non-interest income and lower provisions for potential losses on bad loans, the FDIC said. Most of the gain in non-interest income came from higher trading revenues, gains on loan sales and reduced losses from sales of repossessed property.
The FDIC also noted that banks’ interest income has been eroded by historically low interest rates during the economic recovery, making them more reliant on the fees they charge. Banks’ net interest income fell to $104.4 billion in the fourth quarter from $107.1 billion a year earlier, the lowest quarterly level since the final three months of 2009, the FDIC said.
[quote] For all of 2012, the agency said bank earnings rose 19 percent to $141.3 billion, the second-highest annual level ever. [/quote]
“The improving trend that began more than three years ago gained further ground in the fourth quarter,” FDIC Chairman Martin Gruenberg said at a news conference. “When you look back to where we were just a few years ago, the progress made to date is meaningful.”
The FDIC, created during the Great Depression to ensure bank deposits, monitors and examines the financial condition of U.S. banks and provides a quarterly profile of the industry’s overall health.
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The number of banks on the agency’s confidential “problem” list fell to 651 from 694 in the third quarter, as banks had lower losses on loans in the fourth quarter and set aside almost 25 percent less to cover potential losses than in the final quarter of 2011, the FDIC said.
Still, “troubled loans, problem banks and bank failures remain at elevated levels, while growth in lending and revenue remains sluggish,” Gruenberg said, adding that the agency does not expect the pace of earnings to continue growing at these levels.
He added that demand for credit could dry up, hurting the banking industry, if Congress does not step in to prevent $85 billion in automatic spending cuts due to take effect 1 Mar.
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