WASHINGTON, Mar 10 (Reuters): The US banking sector saw its profits drop by nearly half in the last quarter of 2024, as large firms began paying hefty fees to help recoup costs incurred by several bank failures last spring, the Federal Deposit Insurance Corporation reported Thursday.
Roughly 70 per cent of the 43.9 per cent decline in quarterly bank profits was due to specific, non-recurring expenses at large banks, primarily a special assessment fee larger banks were ordered to pay to the FDIC to replenish its deposit insurance fund. In all of 2023, bank profits were down 2.3 per cent to $257 billion, but remain above pre-pandemic levels, the FDIC said.
The FDIC directed banks to pay the fee to recoup billions of dollars in losses its insurance fund suffered following the failures of Silicon Valley Bank and two other larger firms.
Overall, the latest quarterly numbers from the FDIC painted a mixed picture for the banking industry. On the positive end, the FDIC said bank deposits were up 1.1 per cent in the fourth quarter, the first increase in nearly two years. Also, unrealized losses on securities, which had weighed heavily on some bank balance sheets, declined 30.2 per cent to its lowest level since the second quarter of 2022.
Net operating revenue for the banking sector exceeded $1 trillion for the first time since the FDIC began tracking the data, the agency said.
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