US banking profits slump 94 pc

WASHINGTON: The US banking industry's profits slid 94 per cent in the third quarter from a year ago to $1.7 billion, reflecting the credit crisis ravaging the sector and overall economy, regulators said on Tuesday.

The Federal Deposit Insurance Corp. said insured commercial banks and savings institutions saw a massive drop from collective profits of $28.7 billion in the third quarter of 2007.

"With the exception of the fourth quarter of last year, the latest earnings were the lowest for the industry since the fourth quarter of 1990," the agency said.

"We've had profound problems in our financial markets that are taking a rising toll on the real economy. Today's report reflects these challenges," said FDIC chairman Sheila Bair in a statement.

FDIC cited higher provisions for loan losses as the primary reason for the drop in industry profits.

The industry also reported $7.6 billion in losses on sales of securities and other assets in the third quarter, compared to $77 million in gains a year earlier.

Many banks wrote down the value of mortgage securities and other assets affected by the crisis, FDIC noted.

Nine insured institutions failed in the third quarter, the most since the third quarter of 1993.