U.S. bank profits tumble as industry slows reduction in credit loss provisions – FDIC


WASHINGTON (Reuters) – U.S. bank profits fell 8.3% to $ 70.4 billion in the second quarter of 2021 as companies slowed their credit loss allowance cuts, the Federal Deposit Insurance Corporation reported on Wednesday .

While profits were still significantly higher than a year ago – up 281% from the second quarter of 2020 – banks slowed the pace at which they reduced the big buffers they had built up at their peak of the coronavirus pandemic.

In the second quarter, banks increased their allowance for credit losses by $ 3.7 billion, but those allowances are still down significantly from a year ago, down $ 73 billion, or 117,. 3%. Only 14% of banks said they increased their loss provisions in the last quarter.

Over the past year, the share of profitable banks has increased slightly to 95.8%.

The regulator also reported that banks’ average net interest margin reached a new high of 2.5%.

Loan balances actually edged up for the first time since Q2 2020 thanks to larger borrowing for cars and credit cards. Non-current loans were down 10.8% from the first quarter, driven by a drop in residential non-current loans, which were down 10.9%.

Reporting by Pete Schroeder Editing by Chizu Nomiyama and Mark Porter

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