U.S. banking industry profits fell nearly 70% in the first quarter.

banking U.S USA

U.S. banking industry profits fell nearly 70% in the first quarter as the coronavirus pandemic tore through the nation’s economy, the Federal Deposit Insurance Corp. said in a report released Tuesday.

Lenders nearly quadrupled the amount set aside for expected losses even as interest income was squeezed and loan portfolios swelled — marking the worst quarter since the aftermath of the 2008 financial crisis, according to the FDIC’s latest Quarterly Banking Profile. But FDIC Chairman Jelena McWilliams sounded a positive note, saying the industry “has been a source of strength for the economy in the first quarter despite unexpected shocks.”

In recent years, the quarterly reports had routinely shown record profits, even as banks were required to build unprecedented levels of capital and liquidity after the previous crisis. This one showed the return on assets slipping to 0.38% from 1.35% a year earlier.

The industry posted $18.5 billion in profits for the quarter — the lowest level since 2010.

Loan levels jumped, especially at big banks, as business borrowers looked for ready cash, and deposits rose by more than $1.2 trillion from the preceding quarter. Banks are standing firm as the economy leans on the financial system, McWilliams said in a Tuesday statement.

“Bank capital and liquidity levels remain strong, asset quality metrics are stable and the number of ‘problem banks’ remains near historic lows,” she said.

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