Friday, August 30, 2013

Q2 Banking Industry Performance

FDIC-insured banks and savings institutions earned $42.2 billion in the second quarter, 22.6 percent more than the industry’s $34.4 billion earnings a year ago, the FDIC said yesterday. The average return on assets -- a standard measure of bank profitability -- rose to 1.17 percent, up from 0.99 percent a year ago but trailing its average between 2000 and 2006. Profitability rose as year-on-year noninterest income growth of 11.1 percent outstripped a 1.7 percent fall in interest income.

The banking industry has had 16 consecutive quarters of profits increasing year-over-year, the agency said. Over half of all institutions reported an improvement in quarterly net income from a year ago, and those reporting first-quarter net losses fell to 8.2 percent -- the lowest proportion since 2006. Asset quality continued to improve as troubled loans and leases fell. Charge-offs were $14.2 billion in the first quarter, down $6.3 billion -- or 30.7 percent -- from a year earlier.

The number of institutions on the problem bank list dropped from 612 to 553 -- the ninth straight quarter they declined. The Deposit Insurance Fund balance rose from $35.7 billion to $37.9 billion during the quarter, stemming primarily from assessment revenues, officials said.

“Banks continued their strong performance with robust earnings supported by a diverse product base, lower losses and an ongoing improvement in asset quality,” said ABA Chief Economist James Chessen. “At the same time, institutions face challenges as they recover from a one-two punch of rising compliance costs and weaker-than-normal loan demand that makes it difficult to grow topline revenue.”

Read Jim Chessen's statement.

Read the FDIC press release.

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