NEW YORK Average earning assets and average loans are up at most banks, but net interest income has declined at nine-out-of-10 publicly traded banks with more than $5 billion in assets.
American Banker, an affiliate of Credit Union Journal, reported that narrower net interest margins outweighed increases in average loans at 75% of those banks, and found the results were similar for the more than 600 listed banks for which first quarter numbers were available as of this week. Average earning assets rose at 54% of them from Q4, and average loans rose at 60%, but margins fell at 73% and net interest income fell at 72%.
Across the industry, including banks with stock that does not trade on public markets, average earning assets have been steadily growing since the first quarter of 2010, and average loans have consistently grown since late 2011. Net interest income has notched quarter-over-quarter increases in just two periods since the first quarter of 2010, however, as net interest margins have ground tighter, American Banker reported.
The downward drift in net interest income and margins is to some degree an illusion created by the addition of hundreds of billions of dollars of high-yielding credit card loans that were brought onto balance sheets under new accounting rules at the beginning of 2010. Industrywide, net interest income shot to an all-time high of $109 billion in the first quarter that year and performance was poised to deteriorate as those loans ran off.
