Banks’ bills are increasing, but not their income | Zoom Fintech
Industrial banks and savings banks experienced some pressure on their profits during the fourth quarter of 2019: Interest income fell, but staff prices and other labor bills rose.
The FDIC’s quarterly profile on the efficiency of 5,177 banks confirmed that blended web revenues fell nearly 7% last quarter to $ 55.2 billion (see chart overleaf). The web turnover for the year 2019 fell by 1.5%.
Quarterly interest-free bills, meanwhile, rose 3.2 percent year-on-year on average, with 67 percent of money market institutions reporting an increasing annual value. The majority of the increase (80%) comes from higher wages and benefits.
Falling interest rates mean banks are earning much less on loans, as the Web’s common interest margin declined by 20 fundamentals in the fourth quarter, to 3.28%. Revenue from Web Curiosity fell 2.4% from the previous year. This was the first year-over-year decline in web interest income since the third quarter of 2013. During 2019, banks also saw a decline in the overall return of goods.
“In the second half of 2019, we saw three cuts in short-term interest rates and yield curve reversals,” said FDIC President Jelena McWilliams. “These elements constitute current challenges for the extension of the credit rating and the financing of the banks. It is important that banks maintain prudent underwriting requirements and prudent risk administration in order to protect loans from financial fluctuations. “
Mixed mortgage and lease balances increased $ 117.9 billion (1.1%) in the fourth quarter, with all mortgage categories except commercial and industrial (C&I) loans. rise. Consumer loans (as well as bank cards) grew 3.3% in the fourth quarter, adopted by non-agricultural residential loans (+ 1.4%) and residential mortgage loans (+ 0.9%).
Regardless of the expansion in assets, non-current loans (90 days or more overdue) were relatively safe, with the exception of bank card loans, which saw a quarterly improvement of 10.3%. Web direct debits also increased by 10.4%. Overall, banks also increased their loan loss reserves for bank card portfolios by 1.9%.
The Fed’s February survey of senior mortgage agents found that some banks had tightened their credit card loan requirements, mostly through lower limits and better minimum credit scores. Many of the banks surveyed also stated that they had seen a drop in demand for C&I loans.