The mostly positive first-quarter earnings released Thursday illustrate how far the banking industry has come since the 2008 financial crisis. Still, the report noted that many banks remain cautious about lending, a necessary driver of economic growth.
The report is “broadly in line with what we’ve seen in the economy as a whole,” said Bert Ely, an independent banking analyst based in Alexandria, Va. “Sluggish improvement, but nonetheless improvement.”
The Federal Deposit Insurance Corp. said the banking industry earned $35.3 billion in the January-March period. That’s up from $28.7 billion in the first quarter of 2011 and the highest level since the second quarter of 2007.
About 67 percent of U.S. banks reported improved earnings. Overall revenue increased from the first quarter of 2011, bolstered by higher profits from loans and fees on customers’ bank accounts.
The news wasn’t all good. Bank loans to consumers fell in most categories. Credit card loans and home mortgages were among those showing lower balances.
Acting FDIC Chairman Martin Gruenberg called the decrease in lending “disappointing, after we saw three quarters of growth last year.”
Weakness in the housing market has weighed on broader lending, said James Chessen, chief economist of the American Bankers Association, the industry’s biggest trade group.
“The overall lending volume for banks will continue to grow at a gradual pace until the housing market improves,” Chessen said in a statement.
An exception is loans to commercial and industrial borrowers. Those rose about 14 percent from a year earlier and suggest businesses are expanding.
Banks with assets exceeding $10 billion accounted for most of the earnings growth in the January-March period. While they make up just 1.4 percent of U.S. banks, they accounted for about 81 percent of the earnings.