Bank profits soared to a record $56 billion in the first three months of 2018, federal regulators announced Tuesday, as tax cuts stoked the already hot industry.
Profits would have been a record even if banks’ tax rates had remained the same, Federal Deposit Insurance Corporation Chairman Martin Gruenberg estimated, but the GOP tax law tacked on roughly $6.6 billion in additional profits.
Altogether, bank net income is up more than a quarter over the year. For community banks, the increase is nearly a fifth.
The good news for the banking industry came the same day as the House is scheduled to deliver another victory to small and regional banks by sending a bill that would reduce their regulatory burdens to President Trump’s desk.
Congressional liberals have argued that banks’ profitability means that they should not be given regulatory relief.
Gruenberg, an Obama appointee with an expired term until President Trump’s appointee is confirmed, warned that “the industry needs to be prepared to manage the inevitable downturn, whenever it may occur.”
He also said that, despite their profitability, banks are in a competitive environment, and that some of have responded to the low interest rate environment by taking on riskier assets to get more income.
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