Reuters: Regulatory News: US bank industry earnings grow on lower reserves

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US bank industry earnings grow on lower reserves Aug 28th 2012, 14:03 By Alexandra Alper and Emily Stephenson WASHINGTON | Tue Aug 28, 2012 10:03am EDT WASHINGTON Aug 28 (Reuters) - The U.S. banking industry's earnings continued to rise in the second quarter, as banks set aside less money to guard against losses, according to data released on Tuesday by the Federal Deposit Insurance Corp. The FDIC quarterly report showed the industry earned $34.5 billion in the second quarter, up $5.9 billion, or 20.7 percent, from a year earlier. The amount banks set aside to guard against losses reached a five-year low, declining $5 billion or 26.2 percent from the second quarter 2011. Banks boosted lending during the second quarter, after reducing loan balances in the first quarter, a trend which FDIC Acting Chairman Martin Gruenberg called "encouraging." "The banking industry continued to make gradual but steady progress toward recovery in the second quarter," Gruenberg said in a statement. However he cautioned that "we will have to wait and see if the trend toward increased lending can be sustained." Banks' net operating revenues were higher than a year earlier by $1.3 billion, or 0.8 percent, in the second quarter. An increase in gains on the sale of loans also contributed to the rise in bank earnings.

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