The U.S. banking sector saw profits increase by 2.3% to $66.8 billion in the fourth quarter of 2024, according to a report by a bank regulator released on Tuesday. The Federal Deposit Insurance Corporation (FDIC) announced updates to how "problem banks" are monitored, opting to disclose only the number of downgraded banks, omitting information on assets held.
FDIC Acting Chairman Travis Hill explained that revealing asset amounts posed risks, potentially triggering a bank run if a substantial increase in total assets on the list hinted at a troubled large bank. The report indicated a reduction in problem banks to 66 in the fourth quarter, down from 68 in the previous quarter.
The banking sector overall showed robust performance, with profits for 2024 increasing by 5.6% to $268.2 billion. The fourth-quarter profit surge was attributed mainly to recent interest rate cuts, elevating net interest income by $3.8 billion while decreasing interest expenses more than income. Banks also set aside less for potential losses, with a 5.5% decrease to $22.3 billion from the previous quarter.
However, there was a notable 32.5% increase in unrealized losses on securities held by banks, totaling $482.4 billion, just a 1% rise compared to a year earlier. Domestic deposits rose by 1.2% in the fourth quarter, driven by a 3% rise in uninsured deposits, which now total $218.5 billion.