U.S. Bancorp Q3 Profit Rises 10% as Revenue Growth Outpaces Costs

U.S. Bancorp's third-quarter profit rose 10% year over year as revenue growth outpaced expense increases, while BTIG's contribution helped lift capital markets revenue.

Net income attributable to U.S. Bancorp was $2.202 billion for the quarter ended Sept. 30, up from $2.001 billion a year earlier. Diluted earnings per share climbed 9.8% to $1.34 from $1.22.

Total net revenue reached $7.970 billion, an 8.7% increase from $7.329 billion. Excluding net securities gains and losses, revenue grew 9.5% to $8.035 billion, compared with $7.336 billion a year earlier. Noninterest expenses increased 7.1% to $4.493 billion from $4.197 billion. The faster growth in revenue excluding securities gains and losses produced 240 basis points of positive operating leverage. The efficiency ratio, which measures expenses relative to revenue, improved to 55.9% from 57.2%.

Noninterest income rose 13.1% to $3.480 billion. Net interest income on a taxable-equivalent basis increased 5.6% to $4.490 billion. Results from BTIG covered all three months of the quarter, and capital markets revenue climbed 69.3% year over year.

The provision for credit losses increased 14.5% to $654 million from $571 million. Net interest margin was 2.84%, compared with 2.75% in the year-earlier quarter. Average loans rose 8% to $409.548 billion, while average deposits increased 2.9% to $526.602 billion. The common equity Tier 1 capital ratio stood at 10.8% on Sept. 30.

Expense increases included costs for compensation and benefits, technology and communications, marketing and business development, and BTIG. U.S. Bancorp Chairman and CEO Gunjan Kedia said, “Our exceptional business mix and increasingly strong operating discipline helped us deliver high returns, productivity, and prudent risk management while strengthening revenue growth.”