Commercial Bank Income Increases, but Loan Growth Slows

Industry Updates  »  Commercial Bank Income Increases, but Loan Growth Slows

The FDIC reported that net income of commercial banks and savings institutions increased by over 12% or $5 billon from the previous year. The increase was attributable to increases in both net interest income and non-interest income. Over one-half of the nation’s insured institutions reported year-over- year increases.

Net income has generally been increasing since 2010, although the rate of growth has leveled off in the past two years. However, to put it in perspective, net income was $17.4 billion in the first quarter of 2010 compared to $44.0 billion in the first quarter of 2017.

Interestingly, although loan balances at institutions continue to grow, the rate of loan growth appears to be slowing. This was true across all the major loan categories. Loan growth has remained at or above nominal GDP and, thus, consistent with economic activity. The deceleration in loan demand may, therefore, suggest that businesses and consumers are still wary of accumulating debt rather than weakening of economic conditions.

The first quarter 2017 reports released by the FDIC can be found here:
https://www.fdic.gov/bank/analytical/qbp/2017mar/

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