Treasury yields have posted historical lows for the past several years, implying strongish economic growth and the potential for higher inflation, the Office of the Currency of the Comptroller said.

In the OCC Semiannual Risk Perspective from the National Risk Committee, the yield curve has stayed positively sloped and relatively steep, which shows higher household and corporate income and revenue growth.

However, for banks, the possible negative effects of higher rates include a decline in the value of investment securities, including many mortgage-related securities, the OCC said.

Meanwhile, net income for 2012 increased 12% year over year to more than $94 billion, with banks of all sizes experiencing improvements in operating performance.

Part of the growth was attributed to the largest banks reporting a 21% reduction in provisions for loan losses.

In addition, mortgage refinance activity helped boost system revenue, but that source of strength may ease in 2013.

Overall, the OCC said, “The housing market showed signs of improvement in 2012 due to increased investor demand and the limited supply of new and existing homes for sale.”