US banks report 13.5% jump in profits: FDIC

US banks reported a significant 13.5% jump in profits for the third quarter of 2025, according to the Federal Deposit Insurance Corporation (FDIC). This increase brought total net income for the sector to $79.3 billion.​

Key Drivers of Profit Increase

• Main reasons for the jump in profits were higher net interest income and a substantial drop in provision expenses for loan losses, particularly after a major merger in the previous quarter.​

• Non-interest income also contributed to the gains, as banks earned more from fees and other activities besides lending.​

Sector Health and Trends

• The return on assets (ROA) improved to 1.27%, up from 1.13% in the preceding quarter, and higher than last year’s 1.09%.​

• Deposit levels posted their fifth consecutive quarterly increase, with uninsured deposits climbing by $88.6 billion—a 1.1% rise.​

• The number of “problem banks” declined by two to a total of 57, and overall the number of banks fell by 42 due to mergers and sales.​

Ongoing Challenges

• Despite high profits, banks continue to face elevated past-due rates, especially in commercial real estate, auto loans, and credit cards.​

• For large banks (assets >$250 billion), non-owner occupied commercial real estate had a 4.18% past-due rate, well above pre-pandemic levels.​

Community Banks

• Community banks (3,953 insured) saw net income rise to $8.4 billion, a 9.9% increase from the previous quarter.​

• Their net interest margins and returns also rose, driven by fee income and lending growth.​

US banks are showing solid financial results, but loan quality remains an issue for certain sectors despite overall industry strength.​

The rise in net interest income for US banks in Q3 2025 was mainly driven by wider net interest margins, where the growth in interest income outpaced increases in interest expense. Banks benefited from a favorable lending environment, which supported loan growth and allowed them to charge higher yields while still keeping funding costs relatively restrained.​

Primary Factors Affecting Net Interest Income

• Net interest margin (NIM) increased by 9 basis points to 3.34%, exceeding the pre-pandemic average of 3.25%.​

• The growth in loan volumes, including consumer and commercial real estate lending, contributed to higher interest income.​

• Strategic shifts by banks toward higher-yielding assets and improved repricing of loans versus deposit costs amplified net interest returns.​

A combination of lending growth, asset repricing, and a beneficial rate environment enabled US banks to achieve stronger net interest income for the quarter.​