Bank earnings in the US rose to $40.2bn in the second quarter of 2014 as institutions set aside less money for possible loan losses and cut expenses, according to data released by the Federal Deposit Insurance Corporation (FDIC).
Earnings for April through June gained $2bn, or 5.3%, from $38.2bn in the same period of 2013.
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The rise in earnings was mainly attributed to a $1.9bn (22.4%) decline in loan-loss provisions and a $1.5bn (1.4%) decline in noninterest expenses.
However, second quarter net operating revenue of $169bn was 0.9% lower than a year earlier, FDIC said.
FDIC chairman Martin Gruenberg said "Industry revenue has been under pressure from narrow net interest margins and lower mortgage-related income. Nonetheless, on balance, results from the second quarter reflect a stronger banking industry and stronger community banks."
More than half of the 6,656 or 57.5% of commercial banks and savings institutions insured by the FDIC had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the second quarter fell to 6.8% from 8.4% a year earlier.
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By GlobalDataTotal loan and lease balances rose by $178.5bn (2.3%) in the second quarter to $8.1 trillion. This is the largest quarterly increase since the fourth quarter of 2007.
Banks reduced expenses on employee salaries and benefits as the industry cut its total headcount by more than 37,000 people compared with a year earlier, the FDIC report said.
The average return on assets (ROA) rose slightly to 1.07% in the second quarter from 1.06% a year earlier. Also, the average return on equity (ROE) rose from 9.46% to 9.54%.
