US BancorpThe most recent quarter noted a change in the dynamics of deposit activity, growth in card loans, and the intensity of business lines related to payments that should last until this year, according to the commentary of management Thursday (Jan. 16).
Income materials show credit card loans of $29.4 billion at the end of the most recent quarter, up from $27.7 billion a year earlier. Net charge-offs were 4.28% in the most recent period, measured against the total credit card loan book, compared with 3.65% last year.
Elsewhere in the company’s data, the Payment Services segment saw 2.4% year-over-year growth in merchant processing revenues, and 4.9% growth in corporate payment processing revenues. Separation of company filings revealed that US Bancorp realized $191 million in corporate payment products revenues in the most recent quarter and $419 million in merchant processing services revenues.
Deposit Growth
CFO John Stern said on a conference call with analysts that total average deposits rose 0.7% on a linked-quarter basis to $512 billion. “Our percentage of non-interest bearing deposits to total deposits now looks to be improving in line with our earlier expectations,” he said.
Total revenue growth is expected to be in the range of 3% to 5% for the current year compared to 2024, according to Stern.
Shares of US Bancorp fell 4% in intraday trading on Thursday.
CEO Andy Cecere said in the call that “coming into the year, there are many uncertainties related to the broader macroeconomic environment, persistent inflation, significant rate volatility, political and regulatory headwinds to name a few, but we are effectively managing through changes and most importantly implemented in our strategic goals.”
During a question-and-answer session with analysts, Stern noted “really strong and healthy growth in the paid goods segment. And we have a lot of momentum building. And that’s despite some headwinds that we’ve seen, especially in our prepaid, on the card side of things, as well as freight… We’ve also seen headwinds in ATM withdrawals in our cash service business things decrease or decrease here at 2024. The company maintains guidance for its earnings growth to be in the mid-single digits.
“In terms of payment, we have good momentum in many areas, strategic initiatives are ongoing. Wealth management and capital markets continue to have strong growth in some areas,” said the CFO.
Looking ahead, Stern said that “for the purposes of our forecast, as we think about ’25, we have relatively modest loan and deposit growth throughout the year.”
Asked later in the call about technology and digital initiatives, CEO Cecere said that “in this environment, this connection to banking and payments is as important as ever. And the concept of moving money together with saving money and money lending are all linked … As long as we can offer these things together with an excellent technology platform that we have and also have the ability to grow that into an excellent capital, payment. focused way — so we want to keep the business going. And it’s as critical as it has been for the last 20 years. That’s why we’re so focused on this business.”
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