Banks post solid 3rd quarter earnings, with highest average net interest margin in five years

Banks and savings institutions reported net income of nearly $50 billion in the third quarter of 2017 – up 5.2% ($2.4 billion) from the same period one year ago, and an accompanying increase in average return on assets, to 1.12% from 1.10%, the Federal Deposit Insurance Corporation (FDIC) reported Tuesday.

Additionally, the share of federally insured banks and savings and loans reporting net losses dropped in the third quarter from the same period a year ago.

The deposit insurance agency said the earnings increase was mostly attributable to $8.8 billion more in net interest income (up 7.4%) from a year ago. The data for the third quarter of 2017 were reported from the agency’s Quarterly Banking Profile released Tuesday.

FDIC said the increase in net income resulted in “relatively strong growth” in net interest income and limited growth in operating expenses. More than two-thirds of all banks — 67.3% — reported higher quarterly earnings than a year earlier, FDIC said.  The percentage of banks reporting net losses for the quarter fell to 3.9%, from 4.6% in the third quarter of 2016.

Additionally, the bank insurance agency reported, banks recorded the highest average net interest margin for the industry since the fourth quarter of 2012; it rose to 3.30%, from 3.18% a year earlier. Net interest income was $127.5 billion, FDIC said; more than 80% of all banks reported higher net interest income than in the prior year.  The average net interest margin rose to

Total noninterest income was $639 million (1%) lower than a year earlier.

FDIC-Insured Institutions Earn $47.9 Billion in Third Quarter 2017