Earnings of U.S. Banks Up by 7.3% in Second Quarter, Reports FDIC

Published By : 03 Sep 2015 | Published By : QYRESEARCH

U.S. banks registered a rise by 7% over the second quarter last year, hence reminding of a steadily recovering economy. However, with interest rates reaching the rock bottom, other measures of banking profitability are unlikely to rise from their depressed states anytime soon. 

During the second quarter of last year, earnings of US$43 billion was registered across the 6,348 U.S. banks, thereby registering an increase of 7.3% from the same period a year ago. The information was revealed by the Federal Deposit Insurance Corp. in its quarterly report on industry health. However, this is the highest number of record without taking into account inflation rates. 

Given the prevailing trends in the U.S. banking sector, banks augmented their loan balance by US$185 billion or 2.2%, compared to the first quarter of the present year. With this the banks recorded the highest quarterly increase since 2010. The banks registered a 2.8% increase in industrial and commercial loans compared to that of the previous quarter, 1.3% increase in residential mortgage loans, and 3.1% growth in credit card balances. 

Furthermore the growing nonbanking financial institutions have impelled banks to boost loans to other financial firms that do not accept deposits by 7.6%. 

The total amount of loans and leases added up to US$8.55 trillion. Against the backdrop of the prevailing scenario in the U.S. banking sector, the Chairman of FDIC Martin Gruenberg said that the industry has been experiencing a continued positive trends over the last couple of years. 

However, low rate of environment connotes that neither regulators nor bankers are ready yet to give a clean bill of health to the industry. Analysts working with the brokerage Vining Sparks published a survey conducted on over 220 U.S. community bankers. The survey revealed that 70% of them are positive of continuing to expand their portfolios over the forthcoming years, only 30% were expecting better profitability, given the high regulatory costs and low interest rates. 
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