Association: Banking industry seeing improvement

WASHINGTON – America’s banking industry is seeing steady improvement, highlighted by a sharp increase in business loans and a dramatic improvement in the quality of bank portfolios, according to James Chessen, chief economist for the American Bankers Association, in an Aug. 28 commentary on FDIC second quarter bank earnings reports.
“Banks reached a historic milestone in the second quarter, holding more than $8 trillion in loans on their books for the first time ever,” said Chessen. “The double-digit increase in business lending reflects increasing confidence, with businesses more likely to consider expansion in our improving economy.”
Although net income is at a near-record high, profitability is down compared to pre-crisis levels, he said. Financial institutions are grappling with a jump in compliance and regulatory costs that has ahd a sharp impact on the bottom line, he said.
“While institutions continue to monitor every dime to ensure costs remain firmly under control, there is a limit to how far that can go,” said Chessen. “Business confidence and willingness to expand will be critical going forward and will have a direct impact on both future earnings and the direction of the broader economy.”

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