The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘QBP

FDIC aggregate bank losses masked by trading gains Q1 – 2009


The latest FDIC QBP is out and contains some sobering information on the impact of the recession on bank results.

FDIC Quarterly Banking Performance – 31st March 2009

INSURED INSTITUTION PERFORMANCE

  • Net Income of $7.6 Billion Is Less than Half Year-Earlier Level (61% less than previous period)
  • Noninterest Income Registers Strong Rebound at Large Banks
  • Aggressive Reserve Building Trails Growth in Troubled Loans
  • Industry Assets Contract by $302 Billion
  • Total Equity Capital Increases by $82.1 Billion

Looking behind the apparently positive net income of $7.6Bn we see that first quarter earnings were $11.7 billion (60.8 percent) lower than in the first quarter of 2008 but represented an apparently significant recovery from the $36.9 billion net loss the industry reported in the fourth quarter of 2008, however it included significant trading gains of $9.5 Bn which masked the continuing loan loss problems. Aggregate net income would have been in loss territory based on the business fundamentals.

While at first glance some recovery appears underway, the above along with industry asset contraction, reflecting pay-offs and write downs, suggests we are not close to being out of the woods on the banking sector.

I also note that the level of derivatives is has now increased in 2009 versus 2008, despite earlier commentary that derivatives were being unwound.  (Derivatives represent off balance sheet liabilities)

Written by Colin Henderson

May 27, 2009 at 11:34

Posted in US

Tagged with , , ,

FDIC Quarterly Banking Profile offers some insight to banks’ status


As we await the results of the Federal Reserve Stress tests, the FDIC quarterly tells us much of what to expect.  This report is a roll up of all banks in the US, and it provides some interesting stats.  The numbers are broadly negative over the periods since 2002, and since last year.  Banks are highly levered, and at their most levered for the duration of the reporting periods back to 2002.

FDIC

The Quarterly Banking Profile is a quarterly publication that provides the earliest comprehensive summary of financial results for all FDIC-insured institutions.

  • Capital – $ 1.3 Tn
  • Loans  – $ 7.9 Tn
  • Leverage – 7.49% (worst since 2002)
  • # of banks 8,305 – note, only down 1,000 since 2002

The FT sums up the report, noting that we don’t have to await the stress test to realise the outcomes.  There will be some blood on the table before this exercise is over, and it will continue to keep banks eyes off customer and service development.

The banking system is severely undercapitalized, with numerous insolvent banks. Clearly a more robust banking system requires far more capital and a robust loan loss reserve adding to the capital cushion. Until the trillion plus of impaired assets are removed and the banking system is recapitalized, credit flows will be restricted. In this context, it is puzzling why the administration is tinkering at the fringes with programs designed to enrich Wall Street. Geithner and Summers need to address the banking problems square-on.

Written by Colin Henderson

April 13, 2009 at 23:30

Posted in Uncategorized

Tagged with ,

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