Full-Year ROA and Net Income Increased in 2024
The banking industry reported full-year net income of $268.2 billion, up $14.1 billion (5.6
percent) from 2023. The aggregate return-on-assets ratio (ROA) increased 3 basis points to
1.12 percent. The increase primarily occurred due to one-time events in 2023 and 2024 that
led to lower noninterest expense (down $8.5 billion, or 1.4 percent), higher noninterest
income (up $6.0 billion, or 2.0 percent), and lower realized securities losses (down $5.3
billion, or 46.3 percent) in 2024. The full-year net interest margin decreased to 3.22 percent,
down 8 basis points from 2023.
…
Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios
Persisted
Past-due and nonaccrual (PDNA) loans, or loans 30 or more days past due or in nonaccrual status,
increased 7 basis points from the prior quarter to 1.60 percent of total loans. The industry’s PDNA
ratio remained below the pre-pandemic average of 1.94 percent. The PDNA ratio for non-owner
occupied commercial real estate (CRE) loans declined 5 basis points to 2.02 percent but remained 129
basis points above the pre-pandemic average. Despite declining slightly in the fourth quarter, the
PDNA rate for the non-owner occupied CRE portfolio remained elevated, largely driven by office loans
at banks with more than $250 billion in assets. However, these banks tend to have lower
concentrations of such loans in relation to total assets and capital than smaller institutions,
mitigating the overall risk.The industry’s net charge-off ratio increased 4 basis points from the prior quarter to 0.70 percent, 5
basis points higher than the year-earlier quarter and 22 basis points above the pre-pandemic
average. The credit card net charge-off ratio was 4.57 percent in the fourth quarter, up 9 basis points
quarter over quarter and 109 basis points above the pre-pandemic average.
emphasis added
Click on graph for larger image.
From the FDIC:
The Number of Problem Banks Decreased in the Fourth Quarter
The number of banks on the FDIC’s “Problem Bank List” decreased from 68 to 66 in the fourth
quarter. Problem banks represented 1.5 percent of total banks at year-end, which is within the
normal range of 1 to 2 percent of all banks during non-crisis periods.
This graph from the FDIC shows the number of problem banks.