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U.S. banking industry posts strong income growth in Q3

Staff Writer |
U.S. Federal Deposit Insurance Corporation (FDIC) said on Tuesday that U.S. banking industry posted strong financial results for the third quarter of 2018.

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Commercial banks and savings institutions insured by the FDIC reported aggregate net income of 62 billion U.S. dollars in the third quarter of 2018, 29.3 percent higher than a year ago.

The FDIC also said that more than 70 percent of the 5,477 FDIC-insured institutions reported year-over-year growth in quarterly earnings.

"The banking industry reported another strong quarter," FDIC Chairman Jelena McWilliams said, "improvement in net income was led by higher net operating revenue and a lower effective tax rate."

The percent of unprofitable banks in the third quarter also declined to 3.5 percent from 4 percent a year ago, said the FDIC.

"Loan balances grew, net interest margins improved, and the number of 'problem banks' continued to decline," McWilliams said.

In addition, 5,044 FDIC-insured community banks in the United States reported 6.8 billion U.S. dollars in net income during the third quarter, reflecting a 21.6 percent increase from a year earlier, said the FDIC.

"Community banks also reported another positive quarter, with loan growth and a net interest margin surpassing the overall industry," said McWilliams.

However, McWilliams warned that the long period of low interest rates and the competition in attracting loan customers have led to "heightened exposure to interest-rate risk, and credit risk."

"Banks must maintain prudent management of these risks in order to sustain lending through the economic cycle," she added.

The FDIC is an independent agency created by the U.S. Congress to maintain stability and public confidence in the nation's financial system by insuring deposits.

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