(MENAFN) American financial institutions posted a dramatic earnings jump during the July-September period, with industry-wide profits climbing to $79.3 billion—a 13.5% increase from the second quarter—the US Federal Deposit Insurance Corporation (FDIC) announced Monday.

The regulatory body disclosed that combined net earnings for 4,379 commercial banks and savings institutions under FDIC oversight reached $79.3 billion in the third quarter, representing a $9.4 billion gain from the prior three-month span.

The agency attributed the quarterly surge to specific financial drivers in a statement: "Strong net interest income growth and a reduction in provision expense, primarily related to last quarter's large bank acquisition, drove the quarterly increase in earnings."

Net interest income—the difference between revenue generated from loans and interest paid on deposits—climbed $7.6 billion, marking a 4.2% quarterly advance. Simultaneously, provision expense, which banks set aside to cover potential loan losses, contracted by $9.2 billion or 30.7%.

However, offsetting these gains were rising costs: income taxes jumped $5 billion, representing a 30.1% increase, while noninterest expenses grew by $2.9 billion or 1.9% compared to the previous quarter.

The FDIC clarified the provision expense shift: "The quarterly decrease in provision expense was largely attributable to expenses associated with the acquisition of one large bank in the prior quarter."

Regarding the sector's overall health, the statement added that banks' asset quality indicators are generally positive, but weaknesses persist in some portfolios.

The report provides insight into the banking industry's profitability trajectory as institutions navigate elevated interest rates and evolving economic conditions.

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