U.S. banks earn 40.3 bln USD in 2013 Q1

WASHINGTON, May 29 (Xinhua) -- U.S. banks reported strong profit growth in the first quarter of 2013, the Federal Deposit Insurance Corp. (FDIC) said Wednesday.

FDIC-insured commercial banks and savings institutions earned 40.3 billion U.S. dollars for the fist three months of 2013, 15.8 percent more than the same period in 2012. It was the 15th consecutive quarter since U.S. banks saw quarterly net earnings improve, indicating that the U.S. banking industry has recovered from the recent financial crisis.

Half of all the 7,019 insured institutions reported improvements in their quarterly net income from a year ago, while the share of institutions reporting net losses for the quarter fell to 8.4 percent from 10.6 percent a year earlier, the agency said.

Industry earnings totaled 170.6 billion dollars in the first quarter, a 1.6 percent increase from a year earlier. This was mainly driven by higher noninterest income and lower provisions for loan losses. Banks set aside 11 billion dollars in loss provisions in the quarter, 23.2 percent less than a year earlier, and meanwhile noninterest income was 8.3 percent higher.

"Today's report shows further progress in the recovery that has been underway in the banking industry for more than three years," said FDIC Chairman Martin Gruenberg.

The FDIC also said the number of "problem" banks declined from 651 to 612 in the quarter, with only four insured institutions failed, the smallest number since the second quarter of 2008. So far this year, there have been 13 insured institution failures, compared with 24 during the same period in 2012.

But Gruenberg cautioned that tighter net interest margins and slow loan growth create an incentive for institutions to reach for yield, which is a matter of ongoing supervisory attention.

The U.S. banking industry's average net interest margin fell to 3.27 percent from 3.35 percent in the previous quarter, reaching the lowest level since 2006, according to the FDIC's data.

FDIC was created by the U.S. Congress in 1933 to restore public confidence in the country's banking system. Now the FDIC insures deposits at the country's 7,019 banks and savings associations.

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