For those banks and savings institutions ensured by the Federal Deposit Insurance Corporation (FDIC), it has been a positive third quarter, as the corporation’s Quarterly Banking Profile released November 29 notes.
The institutions involved reported an aggregate net income of $45.6 billion that quarter, a gain of $5.2 billion from the previous year. In addition, the proportion of unprofitable banks fell to the lowest percentage since 1997 – just 4.6 percent.
“Revenue and net income rose from a year ago, loan balances increased, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” FDIC Chairman Martin Gruenberg said. “Community banks also reported solid results for the quarter with strong income, revenue, and loan growth.”
However, not all the news was positive. Gruenberg also said that an extended period of low interest rates has caused an increased exposure to risk, while oil and gas prices have impacted borrowers dependant on the energy sector.
“Banks must manage risks prudently to ensure that growth is on a long-run, sustainable path,” Gruenberg said.
Part of that growth will come from loan and lease balances, which also saw a rise of 6.8 percent or $590.8 billion, during the past year. The main increase in earnings for banks this quarter could be attributed to a $10 billion net interest income increase paired with a $1.2 billion rise in noninterest income.