NEW YORK (AP) — U.S. banks set a record by making more than $60 billion in profits in the second quarter, federal regulators said Thursday, up more than 25 percent from a year earlier.
The Federal Deposit Insurance Corporation said the profit boost came because banks have been able to charge more interest on loans in recent months, and received a substantial lift from the tax law enacted last year that lowered corporate income tax rates.
There are more than 5,500 insured banks in the U.S. but the lion’s share of the profits was earned by the nation’s largest banks. The nation’s nine largest banks, those that have more than $250 billion in assets, earned roughly half of all profits. Banks with assets between $10 billion and $250 billion earned $21.7 billion in profits collectively.
Banks have been profiting heavily from the recent rise in interest rates, which has contributed heavily to their bottom line. The Federal Reserve has raised its benchmark interest rate two times this year, and is expected to raise interest rates another two times before the end of the year.
Most Read Business Stories
- Should you pay off your mortgage before you retire?
- Microsoft alumni play one last game of hallway putt-putt before demolition
- Drivers for Amazon Flex can wind up earning less than they realize
- From suicide blast in Afghanistan to helping run Boeing Commercial Airplanes WATCH
- Rising interest rates, slowing home sales expected to hurt remodelers
Net interest revenue across the entire banking system was $134.1 billion, the FDIC said, up 8.7 percent from the same period a year earlier. Net interest margin also increased, as banks were able to charge more for loans but at the same time avoid paying much more for deposits.
Even if the banks hadn’t benefited from lower tax rates, bank profits would still be up sharply, the FDIC said.
In another sign of the health of the banking system, zero banks failed in the second quarter and the FDIC’s “problem bank list,” which contains the nation’s banks most in danger of failure, fell to 82 institutions, the lowest number since the fourth quarter of 2007.