U.S. bank deposits fell at record pace in Q1, profits flat: FDIC (updated)

First Republic Bank

31/05/2023 15:57

(Adds detail and context)
    By Pete Schroeder
       WASHINGTON, May 31 (Reuters) - 
    U.S. banks saw total deposits decline by a record 2.5% in
the first quarter of 2023, and industry-wide profits were
relatively flat after taking into account the effects of two
large bank failures, the Federal Deposit Insurance Corporation
said Wednesday.
  
        The FDIC said the $472 billion in deposit outflows in
the first quarter was primarily uninsured funds, as insured
deposits actually rose $255.1 billion, or 2.5%, amid the
failures of Silicon Valley Bank and Signature Bank. The decline
in deposits was offset by increased wholesale funding, which
rose 14.4% in the first quarter.
  
        Wednesday's report marks the most comprehensive view of
the banking industry's health since those two failures helped
set off wider turmoil across the sector, including the May
seizure of First Republic Bank. 
  
        The FDIC said bank profits were technically up 16.9% to
$79.8 billion in the first quarter of the year, but profit
levels were effectively flat after taking into consideration the
accounting impact of the acquisition of those two failed firms.
  
        The results showed banks shrinking the amount of
unrealized losses on their books and maintaining strong capital
ratios. But it also found deposit outflows for the fourth
straight quarter and accelerating, and the FDIC placed four new
firms on its "problem bank list," which now includes 43 firms
with a total of $58 billion in assets.
  
        In prepared remarks, FDIC Chairman Martin Gruenberg said
the industry has remained "quite resilient" amid the stress, but
the fuller impact will not be seen until the agency reports
second quarter results later this year.
  
        Gruenberg noted that even flat profit levels are still
high by historical standards, and was boosted by record trading
revenue by large banks and strong growth in non-interest income.
  

 (Reporting by Pete Schroeder, Editing by Nick Zieminski)
 ((Pete.Schroeder@thomsonreuters.com; 202-310-5485;))