FDIC Quarterly Banking Profile: Banking Industry Sees Net Income Rise More Than 27 Percent Post Tax Law

At the start of 2018, bank earnings are up 27.5 percent over the previous year, rising to $56 billion. The massive quarterly haul was driven in large part by higher operating revenue and a corporate tax rate that was lowered this year from 35 percent to 21 percent.

This data was recently released in the FDIC’s Quarterly Banking Profile for Q1 2018.

The report also found that net interest income rose 8.5 percent from the year before, noninterest income increased 7.9 percent from the year before, and loan balances rose 4.9 percent over 12 months.

According to the FDIC, net incomes without the lower rate would have been $49.4 billion, which still represents an increase of $5.5 billion (12.6 percent) from Q1 2017.

Banks also charged off $12.1 billion in uncollectable loans during the first quarter, which is an increase of $540.6 million from the previous year. The annual increase in charge-offs was led by credit card balances. Just under 43 percent of banks reported a year-over-year increase, and net charge offs were lower for most major loan categories.

The banking sector also reported that noncurrent loan rates declined modestly, down 3.4 percent from the previous quarter, with 50.8 percent of banks reporting decreases in these balances. Noncurrent loans are those that are 90 days or more past due in nonaccrual status. This decline was led by residential mortgages, commercial and industrial loans, and credit cards.

At the end of Q1 2018, there were 5,607 FDIC-insured commercial banks and savings institutions. During the quarter, 65 institutions were absorbed by merger transactions, three new charters were added, and there were no failures.