WASHINGTON May 28 U.S. bank earnings fell to
$37.2 billion in the first quarter of 2014, a 7.6 percent dip
compared to the same period a year earlier as mortgage revenue
dropped sharply and trading income also declined.
Data released on Wednesday by the Federal Deposit Insurance
Corp (FDIC) showed bank earnings in the first three months of
2014 down $3.1 billion from the $40.3 billion reported in the
first quarter of 2013.
The FDIC said higher interest rates dissuaded consumers from
refinancing mortgages. Income from mortgage sales,
securitization and servicing fell by $4 billion, or 53.6
percent, compared to a year ago.
"Since the increase in longer-term interest rates in the
second quarter of 2013, mortgage income over the past three
quarters has been about half of what it was over the previous
six quarters," FDIC Chairman Martin Gruenberg said in a
The industry's revenue fell by $6.7 billion, or 4 percent,
to $163.7 billion in the first quarter. Besides mortgages, the
decrease reflected a $1.4 billion, or 18.3 percent, drop in
trading revenue compared to a year earlier.
The biggest U.S. banks have reported lackluster trading
revenue. JPMorgan Chase, for instance, posted
weaker-than-expected profit in the first quarter as both bond
trading and mortgage lending revenue tumbled.
The industry's earnings also were inflated in the first
quarter of 2013 by a one-time gain at one bank related to a
litigation settlement. That gain was not repeated this year.
Despite the decline in earnings overall, the FDIC said more
than half of banks saw year-over-year growth in their earnings
during the quarter. Asset quality improved, with banks charging
off fewer uncollectible loans, and the percentage of noncurrent
loans and leases fell to its lowest level since 2008.
The FDIC said banks are seeing diminishing ability to boost
profits by reducing the amount they set aside in cases of losses
on loans. Banks set aside $7.6 billion during the quarter, a
$3.3 billion decrease from the year earlier.
(Reporting by Emily Stephenson; Editing by Andrea Ricci)