'Due to COVID-19,' US Banking Industry Profits Fell 36.5% Last Year

[Image source= AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Due to the impact of COVID-19, the profit scale of U.S. banks last year decreased by 36.5% compared to 2019.

According to a report released on the 23rd (local time) by the U.S. Federal Deposit Insurance Corporation (FDIC), the profit scale of the U.S. banking industry last year was recorded at $147.9 billion.

The FDIC explained that bank profits declined because banks set aside large loan loss reserves in preparation for losses caused by the spread of COVID-19. However, it added that there were signs of improvement in the fourth quarter of last year. The profit scale in the fourth quarter of last year was $59.9 billion, an increase of 9.1% compared to the same period the previous year.

Despite signs of recovery in the fourth quarter of last year, voices from the banking industry call for continued government support as the risk of losses due to COVID-19 remains.

The American Bankers Association and the Securities Industry and Financial Markets Association sent a letter to the Federal Reserve (Fed), the central bank, on the same day, expressing the position that the capital requirement relief measures for banks should be extended.

The Fed eased capital requirements for banks in April last year, and this measure is scheduled to end at the end of March.

In the letter, the American Bankers Association and others argued that thanks to the capital requirement relief, banks were able to play a pivotal role in stabilizing the market through lending even during difficult economic times, and that the measure should be extended as soon as possible.

Fed Chair Jerome Powell appeared before the Senate Banking Committee on the same day and stated that they are reviewing whether to strengthen capital requirements for banks again.

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