U.S. bank profits dip as loan loss provisions jump in response to global uncertainty – FDIC

　　div classBodysc17zpet90 cdBBJodivpBy Pete Schroederp

　　pWASHINGTON Reuters – U.S. bank profits dropped 6.5 in the first quarter of 2022 to 59.7 billion, as larger firms grew their loan loss provisions in response to heightened economic and geopolitical uncertainty, the Federal Deposit Insurance Corporation reported Tuesday.pdivdivdiv classBodysc17zpet90 cdBBJodiv

　　pBank profits were down 22.2 compared to the first quarter of 2021, and was driven by banks with over 10 billion in assets setting aside more funds to guard against loan losses.p

　　pThe growth in loan loss provisions marks a reversal from recent history, which saw banks enjoy higher profits as they shrank large cushions built up during the pandemic. Growing uncertainty drove firms to resume growing those reserves, which climbed 19.7 billion from the first quarter of 2021.p

　　p“Inflationary pressures, rising interest rates, and geopolitical uncertainty could hamper bank profitability, weaken credit quality, and reduce loan growth,” said acting FDIC Chairman Martin Gruenberg in a statement.p

　　pThat reserve growth was also primarily driven by larger banks with over 10 billion in assets, as only 25 of all banks reported higher loan loss provisions.p

　　pHowever, banks reported loan balances grew another 1 in the first quarter, driven primarily by increased lending in commercial and industrial loans. And noncurrent loan balances continued to fall, dropping 4.5 in the first quarter to a noncurrent loan rate of just 0.84.p

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　　pp Reporting by Pete Schroeder, Editing by Franklin Paul and Chizu Nomiyamap

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