U.S. banks earned $40.4 billion in profits for the third quarter, a 5.1 percent increase from a year earlier, the Federal Deposit Insurance Corp. said.
Lower non-interest expenses were the main reason for the higher earnings in the three-month period that ended Sept. 30, the FDIC said in its quarterly report on industry performance. Reductions in costs tied to litigation outweighed weaknesses in operating revenue at large banks, the agency said.
Loan portfolios grew and the quality of banks’ assets improved, the FDIC said.
Of the 6,270 firms reporting third-quarter results, 59 percent had year-over-year earnings growth. The proportion of banks that were unprofitable declined to 5 percent from 6.6 percent a year ago and was the lowest since 2005.