08/29/2013 10:01 EDT | Updated 10/29/2013 05:12 EDT

US banks earn record $42.2B in 2nd quarter, helped by plunge in losses from bad loans

WASHINGTON - U.S. banks earned more from April through June than during any quarter on record, aided by a steep drop in losses from bad loans.

The Federal Deposit Insurance Corp. says the banking industry earned $42.2 billion in the second quarter, up 23 per cent from the second quarter of 2012.

Banks' losses on loans tumbled 30.7 per cent from a year earlier to $14.2 billion, the lowest in six years. And bank lending increased 1 per cent from the first quarter. Greater lending helps boost consumer and business spending, leading to more jobs and faster economic growth.

Still, the report shows that the largest banks continue to drive the industry's profits while smaller institutions have struggled.