Data from a banking regulator showed that profits at banks of the United States dropped by 69.9 per cent year on year for the first quarter for the current year to touch $18.5 billion because of the economic impact of the novel coronavirus pandemic.
The "deteriorating economic activity" has forced lenders to write off delinquent debt while also setting aside funds worth billions of dollars to create a buffer for future losses, reported the Federal Deposit Insurance Corporation. While a decline in profits was reported by more than half of all banks, while losses were reported by 7.3 per cent of the lenders.
In order to provide cover potential loan losses in the future, the banks set aside a total of $38.8 billion which was almost 280 per cent more compared to the provisions done last year, found the new report which was the first government survey of the banking industry since the novel coronavirus pandemic forced shutting down of large parts of the US economy.
There was an almost 15 per cent rise in the amount of loans banks charged off as delinquent which was driven by an 87 per cent increase in charge-offs for commercial and industrial loans.
There was a 7.3 per cent rise in the amount of non-current loans quarter on quarter which was the highest since 2010.
Even during the pandemic induced downturn, banks had been able to effectively serve clients despite the setbacks, said FDIC Chairman Jelena McWilliams, and added that the banks were a "source of strength for the economy."
"The FDIC was born out of a crisis, and we now find ourselves in the midst of another unprecedented period," she told reporters.
There was an 8,5 per cent or $1trillion increase in deposits in banks from the previous quarter even as many investors cashed out of the stock market.
And during the pandemic, with companies tapping credit lines with banks, there was a 15.4 per cent increase in commercial and industrial loans resulting in jump in loan balances.
For the first time since 2011, the total number of "problem banks" monitored by the FDIC increased as it grown from 51 to 54 firms in the first quarter.
(Source:www.channelnewsasia.com)
The "deteriorating economic activity" has forced lenders to write off delinquent debt while also setting aside funds worth billions of dollars to create a buffer for future losses, reported the Federal Deposit Insurance Corporation. While a decline in profits was reported by more than half of all banks, while losses were reported by 7.3 per cent of the lenders.
In order to provide cover potential loan losses in the future, the banks set aside a total of $38.8 billion which was almost 280 per cent more compared to the provisions done last year, found the new report which was the first government survey of the banking industry since the novel coronavirus pandemic forced shutting down of large parts of the US economy.
There was an almost 15 per cent rise in the amount of loans banks charged off as delinquent which was driven by an 87 per cent increase in charge-offs for commercial and industrial loans.
There was a 7.3 per cent rise in the amount of non-current loans quarter on quarter which was the highest since 2010.
Even during the pandemic induced downturn, banks had been able to effectively serve clients despite the setbacks, said FDIC Chairman Jelena McWilliams, and added that the banks were a "source of strength for the economy."
"The FDIC was born out of a crisis, and we now find ourselves in the midst of another unprecedented period," she told reporters.
There was an 8,5 per cent or $1trillion increase in deposits in banks from the previous quarter even as many investors cashed out of the stock market.
And during the pandemic, with companies tapping credit lines with banks, there was a 15.4 per cent increase in commercial and industrial loans resulting in jump in loan balances.
For the first time since 2011, the total number of "problem banks" monitored by the FDIC increased as it grown from 51 to 54 firms in the first quarter.
(Source:www.channelnewsasia.com)
