BANK PROFITS SOAR DESPITE CREDIT CARD LOSSES.Byline: Rob Wells Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Credit card loans and losses mounted in the second quarter, but that hardly dented dent 1 n. 1. A depression in a surface made by pressure or a blow: a dent in the side of a car. 2. the profitability of the nation's 9,700 commercial banks. They earned a near record $13.8 billion during the same period, regulators said Wednesday. Ricki Helfer, chairman of the Federal Deposit Insurance Corp., said that the agency is stepping up scrutiny of credit card issuers, but said that the FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). believes banks are quite healthy and have sufficient reserves to cover the losses. ``The earnings of commercial banks have never been better,'' Helfer told reporters. In the three months that ended June 30, banks raked rake 1 n. 1. A long-handled implement with a row of projecting teeth at its head, used especially to gather leaves or to loosen or smooth earth. 2. A device that resembles such an implement. v. in $13.78 billion, up 15 percent from the first-quarter profits and slightly off the all-time record earnings of $13.83 billion in the third quarter of 1995. For the first half of the year, bank earnings were $25.5 billion, up 10 percent, due to savings from bank mergers and higher fee income. The second-quarter numbers show a continuing problem with loans to individuals. Banks charged off as bad debt $3.8 billion in loans in the second quarter, up 36 percent from the same period last year. Almost two-thirds of these losses resulted from bad credit card loans, Helfer said. Banks now are charging off credit card loans as bad debt at a 4.48 percent annual rate, the highest level since 1992. Amid the rising debts, banks still are aggressively expanding their credit card loans, which rose by more than $7.3 billion in the second quarter. ``Credit made available through credit cards has more than doubled since the end of 1992,'' Helfer said. Helfer and Wall Street analysts blame the higher charge-offs on rising personal bankruptcies Personal bankruptcy is a procedure which, in certain jurisdictions, allows an individual to declare bankruptcy. In other jurisdictions, bankruptcies are reserved for corporations. , which many debt-burdened consumers are choosing as a first option instead of restructuring their finances. Salvatore J. DiMartino, bank analyst for Advest Inc. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , said bankers are alarmed to see loans which they thought were good ``all of a sudden showing up as surprise delinquencies because people are filing for bankruptcy.'' Helfer said that based in current trends, ``We expect there to be over 1 million bankruptcies in 1996, which would be the first time that occurred.'' Despite this disturbing trend, the bank industry has socked away sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. reserves against problem loans: Banks now have a record $1.77 in
reserves for every dollar in delinquent loans, Helfer said.
Helfer added that the FDIC has taken additional steps to scrutinize scru·ti·nize tr.v. scru·ti·nized, scru·ti·niz·ing, scru·ti·niz·es To examine or observe with great care; inspect critically. scru banks' credit card lending activities. |
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