U.S. Bank Profits Plunge in Q4 Due to FDIC Assessment

Despite a significant quarterly drop, the banking sector's annual net income remains resilient, with ongoing supervisory attention on credit risks.

U.S. banking sector profits fell by nearly 44% in Q4 2023, largely due to a special FDIC assessment to cover costs from bank failures.
The FDIC's special assessment, aimed at replenishing the deposit insurance fund, was primarily paid by large banks, with 95% of the cost borne by banks with assets over $50 billion.
Despite the quarterly drop, the banking industry's full-year net income for 2023 remained above pre-pandemic levels, totaling $257 billion.
Non-current loans and net charge-off rates increased, particularly in credit card and commercial real estate sectors, signaling potential credit risks.
The FDIC added eight banks to its 'problem bank' list, now totaling 52, but emphasized the banking industry's resilience and the need for ongoing supervisory attention.