The FDIC reports that the banking industry earned $35.3 billion in the 3rd quarter, with earnings improving year over year for nine quarters in a row.
Net loans and leases were down .01% from a year ago, while total deposits have increased 7.8%. Lots of money is gushing in, while little is being lent out. The derivatives business is strong increasing 5.9% from a year ago, with notional amount of derivatives outstanding at the end of Q3 being $250.5 trillion.
So how was the money made? After all, net interest income was down 2.2% from a year ago. By putting away 47% less in the loan-loss provision.
Meanwhile the Federal Reserve is planning to re-test the nation’s biggest banks for the fourth time.
Also Bank of America was told to shape up, or the bank’s double secret probation will turn into a very public embarrassment.
The threat of an enforcement action is the latest flashpoint in a tense relationship between U.S. regulators and Bank of America. Directors believe the bank has met demands set out in the 2009 document. Now, “the board’s view is it’s time to take us out of the penalty box,” said one person familiar with the situation. A bank spokesman declined to comment.
Maybe the rough credit sledding isn’t over yet.