Second quarter data from the Federal Deposit Insurance Corporation (FDIC) highlights the resiliency of the banking industry, according to the American Bankers Association (ABA).
FDIC’s data shows insured institutions reported net income of $70.8 billion in Q2, with loans balances increasing from the previous quarter and year-on-year.
Although net income decreased from Q1, it has remained high when compared to historical rates, and if the effects on acquirers’ incomes of their acquisitions of three failed banks in 2023 were excluded, net income would have remained flat.
Sayee Srinivasan, chief economist at the ABA, said: “The FDIC's latest Quarterly Banking Profile shows that the banking industry remains resilient amid continued economic uncertainty. Banks of all sizes saw continued loan growth in the second quarter as credit quality remained strong and delinquency rates stayed low.”
FDIC data confirmed loan balances increased from the previous quarter and year-on-year, with total loan and lease balances increasing $86.5 billion (0.7%).
Asset quality metrics remained favorable despite some deterioration, with loans that were 90 days or more past due or in nonaccrual status (i.e. noncurrent loans) increased to 0.76 percent of total loans, up one basis point from the earlier quarter.
However, total deposits declined for a fifth consecutive quarter, dropping $98.6 billion between the first and second quarters. A reduction in estimated uninsured deposits drove the quarterly decline, while estimated insured deposits continued to increase during the quarter.
Martin J. Gruenberg, FDIC chairman, said: “Despite the period of stress earlier this year, the banking industry continues to be resilient. However, the banking industry still faces significant challenges from the effects of inflation, rising market interest rates, and geopolitical uncertainty.”