trending Market Intelligence /marketintelligence/en/news-insights/trending/j8eojbjzqrloerl6s98deg2 content esgSubNav
In This List

US banks post record profits in Q1'18

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


US banks post record profits in Q1'18

American banks reported record net income for the first quarter as the full impact of lower tax rates came into play.

The bottom line for all U.S. banks and thrifts increased to $55.97 billion, up from $43.89 billion in the year-ago quarter. The bump to profit levels came after a messy fourth quarter in 2017, when many companies recorded one-time hits based on devalued deferred tax assets. In the fourth quarter of 2017, industrywide net income fell steeply to $25.38 billion.

With the new rates in effect, income tax expense dropped to $14.93 billion, the lowest level since the fourth quarter of 2012.

SNL Image

The cost of deposits continued to rise, increasing to 0.63% in the first quarter from 0.57% in the previous quarter and 0.43% in the year-ago quarter. Deposit costs have risen in eight of the nine quarters since the Federal Reserve's first post-crisis rate hike in December 2015. The Fed has raised rates five times since that initial hike.

Net interest margin widened to 3.27% during the quarter, a trend that began in the fourth quarter of 2016. The metric did fall, however, on a fully taxable-equivalent basis quarter over quarter for the first time in five quarters.

Other profitability ratios, such as return on average assets and return on average equity, rose as well on both a sequential and a year-over-year basis.

Loan growth slowed to 0.3% quarter over quarter, as growth in total real estate loans fell to 0.45% from 0.91% last quarter and total consumer loans decreased quarter over quarter by 2.6%. That marks the slowest pace at which loans have grown since the second quarter of 2013, excluding a brief decline in the first quarter of 2017.

However, credit quality improved, with delinquencies and nonperforming asset ratios decreasing compared with the previous quarter.

SNL Image

SNL Image

Did you enjoy this analysis? Click here to set real-time alerts for data-driven articles on the U.S. financial sector

The data in this article was compiled using aggregated call report data for commercial banks, savings banks and savings & loan associations. The aggregated data can be downloaded from the Regulated Depositories section of the Data Wizard of the MI Excel add-in.