NEW YORK (AP) — The banking industry collectively made $233.1 billion in profits in 2019, the Federal Deposit Insurance Corporation said Tuesday, the industry’s second-most profitable year ever.
The slight drop in profits from 2018 is due to the drop in interest rates, which happened in the second half of last year. The Federal Reserve cut its benchmark interest rate three times, in an effort to shore up the U.S. economy, which was facing difficulties from the U.S.-China trade war and a slowing manufacturing sector.
The small drop in profits is the first time the banking industry saw a full-year drop in profits since 2013.
The impact of interest rates were more noticeable in the fourth quarter. Bank profits in the last three months of the year were down nearly 7% from a year earlier, mostly due lower interest income.
The FDIC’s look at the banking industry reflects a healthy — and incredibly profitable — industry. The number of “problem banks,” or banks that are at risk of failing, fell to 51 in the fourth quarter. That’s the lowest number of problem banks since 2006, right before the financial crisis.
This story has been corrected to show that the Federal Reserve cut its benchmark interest rate three times, not twice, last year.