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Banking Conditions

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Balance sheets of insured banks show continued health. During the first half of 1998, bank profitability remained strong, with the net interest margin hovering above 4% and return on equity exceeding 14.8%. For the same period, more than 95% of commercial banks posted positive profits. Core bank capital is another indicator of strength: For the fifth straight year the core capital ratio—defined as common equity capital, noncumulative perpetual preferred stock, and minority interest in consolidated subsidiaries, less goodwill and other intangible assets, as a percent of total assets—exceeded 7.5%. Asset quality also appears to be improving, with nonperforming assets falling to 0.65% of total assets.


Suggested citation: “Banking Conditions,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-12, pp. 16-17, 12.01.1998.

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