Funds News

UPDATE 1-U.S. bank profits down 1.5% in 2019 - FDIC

(Adds detail and context)

WASHINGTON, Feb 25 (Reuters) - The U.S. banking sector reported $233.1 billion in profits in the fourth quarter of 2019, a 1.5% decline from the year prior, according to new data from a U.S. banking regulator.

The Federal Deposit Insurance Corporation reported that quarterly bank profits were down 6.9% from the fourth quarter of 2018, as net interest income was down 2.4% in 2019, the first decline over a twelve-month period since the third quarter of 2013.

The decline in yearly bank profits was due to slower growth in net interest income and a nearly 10% jump in loan-loss provisions, which are funds banks set aside to cover potential loan losses.

Nearly half of all banks reported year-over-year declines in profits, but the level of unprofitable banks held steady at 7.2% from the end of 2018.

“The banking industry reported strong results, despite declines in full-year and quarterly net income,” said FDIC Chairman Jelena McWilliams in a statement.

The FDIC said reductions in short-term interest rates and yield-curve inversions weighed on bank finances. The decline in profits come after banks reported record profits earlier in the year, boosted by continued economic growth and savings from the 2017 tax law. (Reporting by Pete Schroeder Editing by Chizu Nomiyama)