U.S. banks see higher net income, fewer unprofitable lenders: FDIC

November 29, 2016 10:34 AM EST

U.S. dollar notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/Illustration

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WASHINGTON (Reuters) - U.S. banks' net income increased by $5.2 billion, or 12.9 percent, compared to the third quarter of last year as the number of struggling lenders fell, the Federal Deposit Insurance Corporation said.

Total credits increased 6.8 percent, or $591 billion, in the third quarter driven in part by new home loans credits and commercial real estate, the regulator said on Tuesday.

The FDIC noted that the share of unprofitable banks, 4.6 percent, was the lowest since the third quarter of 1997.

The Federal Reserve has kept interest rates low since the 2008 financial crisis but banks must prepare for those rates to climb, said the head of the FDIC, which shields bank deposits if a lender fails.

"Low interest rates for an extended period have led some institutions to reach for yield," FDIC Chairman Martin Gruenberg said in a statement.

"Banks must position themselves for rising interest rates going forward."

(Reporting By Patrick Rucker; Editing by Meredith Mazzilli)

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