US banking sector reports $62 bn profit in Q3, boosted by lower tax rate

The US banking sector reported $62 billion in profits in the third quarter, up 29.3 per cent from the same period a year ago, according to quarterly data from the Federal Deposit Insurance Corporation.

The regulator said in a statement that profits were boosted by a lower effective tax rate and higher operating revenues.

Only 3.5 per cent of banks reported net losses, down from 4 per cent a year ago. The number of problem banks also fell from 81 in the second quarter to 71 in the third quarter, the lowest number since the third quarter of 2007.

The FDIC's chair, Jelena McWilliams, said that while profitability was strong, the industry had seen heightened exposure to credit and interest-rate risk as lenders searched for higher-yield loans.

"Attention to the prudent management of these risks will position banks to be resilient so that they can sustain lending," McWilliams told reporters.

"The competition to attract loan customers has been strong, and it will remain important for banks to maintain their underwriting discipline and credit standards."