Economy

U.S. bank profits slow on lower noninterest income, higher realized losses

Published

5 months ago

November 30, 2023

U.S. bank profits slow on lower noninterest income, higher realized losses

© Reuters. FILE PHOTO: The Federal Deposit Insurance Corp (FDIC) logo is seen at the FDIC headquarters as Chairman Sheila Bair announces the bank and thrift industry earnings for the fourth quarter 2010, in Washington, February 23, 2011.REUTERS/Jason Reed/File Photo

By Pete Schroeder

WASHINGTON (Reuters) – U.S. banks reported Wednesday a slowdown in profits in the third quarter of the year, as lower noninterest income and higher realized losses on bank investments took a toll.

The U.S. Federal Deposit Insurance Corporation reported bank profits at $68.4 billion in the most recent quarter, down 3.4% from the prior quarter. Year over year, bank profits were down 4.6%, due in large part to banks setting aside more funds in provision expenses for potential loan losses, which were up 33.2% in the last four quarters.

Noninterest income was down $4.1 billion, or 5.2%, in the third quarter, while realized losses climbed $3 billion, the FDIC said.

The agency also reported that banks saw their unrealized losses on securities climb to $683.9 billion in the third quarter, a 22.5% jump driven primarily by rising mortgages rates that have reduced the value of mortgage-backed securities held by banks.

However, the agency noted that despite these challenges, banks remain well-capitalized, the rate of deposit flight has steadied, and the level of noncurrent loans held by banks remained below pre-pandemic levels.

“The banking industry continued to show resilience in the third quarter,” said FDIC Chairman Martin Gruenberg in a prepared statement.

Gruenberg, who typically holds a press conference following the release of the quarterly report on bank profits, was not made available to reporters Wednesday.

The release of the third-quarter report marked the FDIC’s first since the agency was embroiled in controversy over reports of sexual harassment and other inappropriate conduct. The FDIC’s board of directors announced a special committee to examine the claims, which include whether Gruenberg appropriately addressed issues that came to his attention. The FDIC Inspector General is also conducting an inquiry on the matter.

Gruenberg has faced multiple calls for his resignation from Republicans in Congress, as lawmakers have also announced their own probes into the matter.

Sen. Joni Ernst, a Republican from Iowa, sent a letter to Gruenberg Wednesday, demanding documents detailing to how the FDIC has handled inappropriate behavior at the agency in the past, including any legal settlements or non-disclosure agreements stemming from complaints.

“There must be serious consequences, including termination and criminal prosecution when warranted,” she wrote.

An FDIC spokesperson did not respond to a request for comment on the letter.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

4 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.