U.S. banks and savings institutions insured by the Federal Deposit Insurance Corp. reported an aggregate profit of $35.3 billion in the first quarter of 2012, jumping 23 percent, or $6.6 billion, from the $28.8 billion in net income for the industry in the first quarter of 2011.
The FDIC also reports that this marks the 11th consecutive quarter with industry earnings recording a year-over-year increase. However, loan balances declined by $56.3 billion (0.8 percent) after three consecutive quarterly increases.
Overall, the banking industry has remained on a steady recovery course since the financial crisis of 2008.
The number of “problem” institutions fell for the fourth quarter in a row, from 813 to 772 – the smallest number since year-end 2009, the FDIC said.
“The condition of the industry continues to gradually improve, said FDIC Acting Chairman Martin J. Gruenberg said. “Insured institutions have made steady progress in shedding bad loans, bolstering net worth, and increasing profitability.”
Gruenberg also said that the drop in loan balances is disappointing, but conclusions should not be drawn based solely on one quarter.
More than two-thirds of all institutions (67.5 percent) reported improvements in their quarterly net income from a year ago. Lower provisions for loan losses and higher non-interest income contributed to most of the year-over-year improvement in earnings.
Meanwhile, the share of banks reporting net losses for the quarter fell to 10.3 percent from 15.7 percent a year earlier.
The average return on assets, a basic yardstick of profitability, rose to 1.02 percent from 0.86 percent a year ago.
Lower provisions for loan losses and higher non-interest income were responsible for most of the year-over-year improvement in earnings.
First-quarter loss provisions totaled $14.3 billion, almost one-third less than the $20.9 billion that insured institutions set aside for losses in the first quarter of 2011.