Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $48.3 billion in Q2/17, up $4.7 billion (10.7%) from a year earlier. The increase in earnings was mainly attributable to a $10.3 billion (9.1%) gain in net interest income and a $654 million (1%) increase in non-interest income.
“This was another positive quarter for the banking industry. Revenue and net income growth were both strong, profitability reached a post-crisis high, and net interest margins improved. While the quarterly results were largely positive, the operating environment for banks remains challenging,” said FDIC Chairman Martin J. Gruenberg.
Financial results for Q2/17 are included in the FDIC’s latest Quarterly Banking Profile released on August 22, 2017. Of the 5,787 insured institutions reporting second quarter financial results, 63.4% reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable in the first quarter fell to 4.1% from 4.6% a year earlier.
“Community banks also reported another solid quarter of revenue, net income, and loan growth,” Gruenberg said. “However, as the economy enters the ninth year of an expansion characterized by modest growth, the annual rate of loan growth continued to slow for a third consecutive quarter. The industry must manage interest-rate risk, liquidity risk and credit risk carefully to remain on a long-run, sustainable growth path.”
Highlights from the Q2/17 Quarterly Banking Profile:
- Quarterly earnings were 10.7% higher than in Q2/16 due to relatively strong growth in net interest income and relatively limited growth in operating expenses.
- Net interest income was $10.3 billion, 9.1% higher than a year ago.
- Loan-loss provisions totaled $12 billion, an increase of $273 million (2.3%) compared to Q2/16.
- Noninterest expenses of $108.6 billion were $3.5 billion (3.3%) higher than in Q2/16, as a 2.3% year-over -year increase in employment was reflected in higher payroll expenses.