U.S. banking sector profits down 7.3 percent in Q3
Topics: U.S. BANK
The quarterly decline in profits was "due to nonrecurring events at three large institutions", said the FDIC, which oversees 5,256 commercial banks and savings institutions, referring to Bank of America, Wells Fargo and Mufg Union Bank.
For the third quarter, 62 percent of all institutions insured by the FDIC reported a year-on-year increase in net income, while slightly more than 4 percent of institutions were unprofitable.
"Overall, the banking industry reported strong loan growth, and the number of 'problem banks' remained low," FDIC Chairman Jelena McWilliams said in a statement.
"This quarter, we also saw two reductions in short-term interest rates and a flat yield curve, which present new challenges in credit extension and funding," McWilliams said.
The net interest income in the third quarter increased by just 1.2 percent from a year ago, the slowest growth rate since the fourth quarter of 2014, according to the FDIC. "It is imperative that banks maintain careful underwriting standards and prudent risk management in order to maintain lending through this economic fluctuation," said the chairman. The Federal Reserve has already lowered interest rates three times since July, amid growing risks and uncertainties stemming from trade tensions, weakness in global growth and muted inflation pressures. ■