U.S. bank profits dip on a slower reduction in loan loss provisions Outbreak of the coronaviruses COVID -- 19 in New York.
WASHINGTON Reuters - U.S. bank profits fell by 1.2% in the third quarter of 2021 to $69.5 billion as firms were slower to shrink their credit loss provisions and grappling with low interest rates, the Federal Deposit Insurance Corporation reported Tuesday.
Bank profits are up nearly 36% from the same time a year ago when banks were rushing to set aside funds to protect against pandemic-driven loan losses.
Banks have been shrinking those loan loss provisions for three straight quarters but slowed the decline in the third quarter, dropping it by $5.2 billion compared to 10.8 billion in the second quarter.
The rate of non-current loans fell to 6.3% as banks continued to shrink those reserves. The net charge-off rate for loans that are no longer expected to be repaid fell to 0.19%, the lowest level on record.
The total loan balances were up slightly, as two-thirds of all banks reported annual profit growth. Nearly 96% of banks were profitable.
The banking industry has continued to support the country's needs for financial services while facing the challenges presented by the Pandemic, according to FDIC Chairman Jelena McWilliams, with strong capital and liquidity levels to support lending and protect against potential losses.
In the second quarter, the net interest margin for banks increased from a record low to 2.56%, as banks reported a $5.2 billion increase in interest income, a slight increase from the quarter before.