BANKING: Better economy lifts bank earnings

Times Board of Economists - Report from David Rose, president of Northwest Indiana market, Horizon Bank
2013-01-27T00:00:00Z 2013-12-18T16:30:36Z BANKING: Better economy lifts bank earningsBowdeya Tweh, (219) 933-3316
January 27, 2013 12:00 am  • 

Northwest Indiana bank executive David Rose said income statements of many banks around the country remain better than they were a few years ago as a result of improved economic conditions.

Federally insured banking institutions reported earning $37.6 billion in the third quarter of 2012, which was the highest level in the industry since the third quarter of 2006, according to the Federal Deposit Insurance Corp. Net operating revenue in the quarter had its largest year-over-year increase since the fourth quarter of 2009.

Rose said low-interest rates are helping to fuel real estate activity and higher levels of lending to consumers is helping them spend money. However, the low interest rates are hard on people depending on interest earned from accounts.

"It's a challenge for people that are net depositors," Rose said. "From a net borrower perspective, rates ... are very, very cheap."

In the next few years if rates stay at relatively low levels, Rose said banks will have to find ways to boost revenue because net interest margins are shrinking. He said this could drive institutions to look at their fee structure for services provided.

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