WASHINGTON (AP) — U.S. banks’ earnings in the final quarter of 2016 rose 7.7 percent from a year earlier, as lending continued to grow and banks set aside less for losses on loans for the first time since late 2015.
The data issued Tuesday by the Federal Deposit Insurance Corp. showed strength in the industry more than eight years after the financial crisis struck. However, banks continued to post bigger losses on loans, especially for credit cards and commercial and industrial loans.
The FDIC reported that U.S. banks earned $43.7 billion in the fourth quarter, up from $40.8 billion a year earlier.
Almost 60 percent of banks reported an increase in profit from a year earlier. Only 8.1 percent of banks were unprofitable, down from 9.6 percent in the fourth quarter of 2015.
FDIC Chairman Martin Gruenberg said some banks have been getting around low interest rates that crimp their profits by making more risky loans with higher rates and extending the terms of loans. FDIC examiners will continue to keep a close eye on the situation, he said.
As a sign of a healthy banking industry, overall lending increased by 0.8 percent. Credit card loans showed the biggest growth, 5 percent, while lending for real estate construction rose 3.3 percent. Banks’ net interest income on loans increased by $8.4 billion, or 7.6 percent.
At the same time, the volume of credit card loans that were written off in the fourth quarter rose by $1.4 billion, or 24.8 percent. Commercial and industrial loans written off jumped by $666 million, or 37.9 percent.