Profits and Balance Sheet Developments at U.S. Commercial Banks in 2007

Figure 1. Bank profitability, 1985-2007. Data plotted as curves. The return on equity begins in 1985 at about 11 percent, dropping to nearly 1 percent by the middle of 1987, then rebounding to about 11.6 percent by 1988, and then dropping by about half in 1989 and remaining at that level for about a year. The return on equity then rises from about 7.3 percent in 1990 to about 15.3 percent in 1993, varies between about 13.5 percent and 15.5 percent through 2003, falls to about 13 percent in 2005, and then rises to 13.67 percent in 2006 but finally falls to about 9.4 percent in 2007. The return on assets begins in 1985 at about 0.7 percent, dropping to nearly 0.08 percent by the middle of 1987, then rebounding to about 0.7 percent by 1988, and then dropping by about half in 1989 and remaining at that level for about a year. The return on assets rises from about 0.5 percent in 1990 to about 1.2 percent in 1993, varies between 1.2 percent and 1.4 percent through 2005, rises slightly to 1.39 percent in 2006, but drops to about 0.97 percent by 2007.

Note: The data are annual.