Connecticut bank profits continued to improve in 2015 even as historically low interest rates put pressure on lenders’ margins.
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Connecticut bank profits continued to improve in 2015 even as historically low interest rates put pressure on lenders' margins.
The 43 banks headquartered in Connecticut saw their collective 2015 profits increase 10.3 percent in 2015 to $704 million, compared to $638 million a year earlier, according to the Federal Deposit Insurance Corp.
It was their highest profitability since prior to the Great Recession.
Nationally, commercial banks and savings institutions insured by the FDIC reported aggregate net income of $40.8 billion in the fourth quarter of 2015, up $4.4 billion, or 11.9 percent from a year earlier. The increase in earnings was mainly due to higher operating revenues and declining operating expenses, FDIC said.
“Revenue and income were up from the previous year, overall asset quality continued to improve, loan balances increased, and there were fewer banks on the problem list,” said FDIC Chairman Martin J. Gruenberg. “However, banks are operating in a challenging environment. Revenue growth continues to be held back by narrow interest margins. Many institutions are reaching for yield, given the competition for borrowers and low interest rates. And there are signs of growing credit risk, particularly among loans related to energy and agriculture.”
During 2015, two Connecticut banks failed to turn a profit, while nearly two-thirds saw their profitability increase.
Total assets and deposits grew 7.3 percent and 9 percent, respectively, during the year to $99.6 billion and $74.7 billion. Lending to individuals and businesses also grew, as Connecticut banks reported $71.7 billion in loans and leases on their books at the end of 2015, up 9 percent from a year earlier. Meanwhile, loan quality is also improving as banks reported a lower percentage of noncurrent loans and leases and nonperforming assets, at 0.89 percent and 0.69 percent respectively.
– Greg Bordonaro
