P. M. BRIEFING : Bad Loans Lower Bank Profits

A sharp rise in bad real estate and other domestic loans held consumer bank profits to a weak $2.7 billion in the final three months of last year, the government said today.

For the year, banks earned $16.3 billion, a sharp 34% decline from last year’s record $24.8-billion profit, the Federal Deposit Insurance Corp. said.

Earnings reached record highs in the first two quarters of 1989 of $7.3 billion and $7 billion. But the industry went into the red in the July-September period, losing $740 million because of Third World debt problems.

FDIC Chairman L. William Seidman said 1989 “came in like a lion and went out like a lamb. . . . We had record earnings in the first half of the year . . . (and) a dramatic change in the second half.”