US bank earnings plunged nearly 25 per cent in the third quarter, falling below $30bn for the first time since 2003 as the sagging US housing market hit profits, according to government data.

Net income for banks in the period fell to $28.7bn, down $9.4bn from last year driven by a steep increase in provisions for loan losses and a drop in non-interest income, according to the Federal Deposit Insurance Corporation.