The U.S. banking system remained sound and resilient, with regulatory capital ratios approaching or exceeding historical highs, the Federal Reserve said today in the second of its two yearly reports on the nation’s financial stability. Measures of bank profitability over the first half of 2024 were within typical ranges, and third-quarter earnings reports showed that overall profitability remained robust, it added.
Credit quality at banks remained sound, but the Fed identified “pockets of concern.” It noted that delinquency rates for credit card and auto loans are somewhat elevated and increased further in the first half of 2024. “Of note, exposures in credit card loans remained concentrated in a few large banks that are subject to regular stress testing and are therefore expected to be better prepared to manage losses in their loan portfolios,” it said.
The Fed also said that the delinquency rate on commercial real estate loans held on banks’ books remained at historically low levels at the end of the second quarter, especially among regional and community banks. However, delinquency rates at larger banks have been showing a modest upward trend over the past few quarters, it said.
