Aggregate net income for Federal Deposit Insurance Corp.-insured banks and savings institutions totaled $59.9 billion in the fourth quarter of 2020, an increase of $5 billion (9.1%) from a year ago, the FDIC said in a news release.
Growth in quarterly net income was led by a reduction in provision expenses, according to the news release. Financial results for the fourth quarter of 2020 are included in the FDIC’s Quarterly Banking Profile, which was released Tuesday.
“Modest improvements in the economy and higher consumer spending supported stronger earnings results for the banking industry in the third quarter,” the agency said. “However, economic uncertainties and pressure on revenue from unprecedented net interest margin compression continued to weigh on the banking industry. Nonetheless, the industry remains well positioned to accommodate loan demand and support the economy.”
PROFILE HIGHLIGHTS
Full-year net income for 2020: The banking industry reported full-year net income for the year of $147.9 billion, down $84.9 billion (36.5%) from 2019. The drop was primarily due to higher provision expenses in the first half of the year, related to declining economic conditions.
Average return-on-assets ratio fell from 1.29% in 2019 to 0.72% in 2020.
Quarterly net income: Net income totaled $59.9 billion, an increase of $5 billion (9.1%) from the fourth quarter of 2019. The drop in provision expenses drove the improvement in quarterly net income.
More than half of all banks (57.4%) reported annual improvements in quarterly net income. The share of unprofitable institutions remained relatively stable from a year ago at 7.3%.
The return-on-assets ratio was 1.11% during the fourth quarter, up from 0.97% in the third quarter but down from a record high of 1.41% in the third quarter of 2018.