Banks and thrifts cut provisioning in the third quarter despite some concern that the credit cycle is approaching a turn.
During the 2008 credit crisis, banks built huge reserves to handle the massive spike in mortgage defaults. As mortgage delinquencies abated, banks were able to release reserves at a rapid clip, acting as an earnings tailwind for the industry.
At the start of the year, it appeared those days were over as energy concerns forced banks to increase provisioning on a linked-quarter basis. But energy prices have rebounded, dampening concerns of losses from the oil-and-gas sector.
