The U.S. banking system continues to maintain strong capital and liquidity levels while maintaining strong profitability and healthy loan growth, leaving banks well-positioned to support a growing economy, the Federal Reserve said in its most recent Supervision and Regulation Report, published yesterday.
The report is usually published twice yearly in conjunction with the vice chair for supervision’s testimony to Congress, but the most recent report is the first released since November of last year. It summarizes the state of the banking system and the Fed’s current regulatory priorities.
Among its findings, the report found that aggregate loan growth across commercial banks was strong in the first half of the year, reaching more than 5% on an annual basis in the second quarter. Most major loan categories experienced growth, although commercial and industry loan growth experienced a slow first quarter before exceeding 5% on an annualized basis in the second quarter. Most major loan categories also experienced declines in delinquency rates.
As far as regulation, the Fed noted it is currently focused on tailoring its supervisory approach to each bank based on its size, complexity, business model and risk profile. It is also evaluating the current capital framework, including the supplementary leverage ratio and other leverage ratio requirements, potential reforms to the global systemically important banks surcharge, stress testing practices and Basel III capital requirements.
