U.S. banks's net income shrinks in Q4 last year

The net income of U.S. banks fell in the fourth quarter last year compared with the same period in 2013 as large banks' higher litigation expenses ate profits, the Federal Deposit Insurance Corp. (FDIC) said Tuesday.

The FDIC-insured commercial banks and savings institutions reported aggregate net income of 36.9 billion U.S. dollars for the last three months of 2014, down 2.9 billion dollars or 7.3 percent from the earnings of 39.8 billion dollars the industry reported a year earlier, the FDIC said.

The decline in earnings was mainly attributable to a 4.4 billion-dollar increase in litigation expenses at a few large banks, said the FDIC.

"The banking industry continued to improve at the end of the year," said FDIC Chairman Martin J. Gruenberg in a statement.

The majority of U.S. banks have improved their financial performance, as 61.2 percent of the 6,509 insured institutions had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the fourth quarter dropped to 9.4 percent from 12.7 percent a year earlier, according to the FDIC.

"In addition, banks made loans at a faster pace, asset quality improved, and the number of banks on the 'Problem List' declined to the lowest level in six years," said Gruenberg.

The FDIC was created by the U.S. Congress in 1933 to restore public confidence in the country's banking system. Now it insures deposits at the country's 6,509 banks and savings associations. Endite