July 16 - U.S. Bancorp reported record quarterly revenue, citing robust loan growth across several categories and broad-based gains in fee income. Management noted the recent closing of its acquisition of investment bank BTIG as an incremental contributor to the quarterly performance.
Net interest income - the spread between interest earned on loans and interest paid on deposits - rose 7.7% from the year-earlier period to $4.36 billion in the second quarter. The company attributed that increase to solid loan growth as well as repricing of fixed assets.
Average loans grew 7.1% during the quarter, led by advances in commercial loans, credit card balances and commercial real estate lending. Alongside lending gains, the bank reported a third consecutive quarter of record consumer deposits, and CEO Gunjan Kedia said credit quality continued to improve.
Fee revenue expanded materially as total fee income climbed 13.2% to $3.37 billion for the quarter. The June completion of U.S. Bancorp's acquisition of BTIG - a transaction valued at up to $1 billion - strengthened the bank's capital markets capabilities, management said.
Capital markets revenue saw a pronounced increase, rising 62.5% to $512 million for the quarter. Management identified the BTIG acquisition, higher fees from corporate bond underwriting and intensified client-related derivative activity as the primary drivers of that lift.
On the bottom line, profit attributable to U.S. Bancorp increased 20% to $2.18 billion. Total net revenue for the quarter rose 10.1% to $7.71 billion.
Key takeaways
- Net interest income up 7.7% to $4.36 billion, supported by 7.1% average loan growth and fixed-asset repricing.
- Total fee revenue rose 13.2% to $3.37 billion; capital markets revenue jumped 62.5% to $512 million following the BTIG acquisition and stronger underwriting and derivatives activity.
- Profit attributable to the bank increased 20% to $2.18 billion; total net revenue climbed 10.1% to $7.71 billion.
Sectors impacted - banking, corporate bond markets, commercial real estate and consumer lending.
Risks and uncertainties
- Capital markets revenue was largely driven by the BTIG acquisition and fee-based activities such as corporate bond underwriting and client-related derivatives - components that can fluctuate with capital markets conditions.
- Net interest income growth depended on continued loan expansion and fixed-asset repricing; a slowdown in loan growth would reduce this source of revenue uplift.