US Bancorp beats forecasts but credit losses mirror US economic troubles

US BANCORP posted a 76 per cent year-on-year decline in second quarter profit yesterday, as it suffered mounting credit losses amid ongoing deterioration in the US economy.<br /><br />Second-quarter net income fell to $221m (&pound;134m), or $0.12 a share, compared to $926m, or $0.53, a year earlier, despite a nine per cent rise in revenue to $4.16bn.<br /><br />The bank outperformed an analysts&rsquo; consensus forecast of a profit of $0.10 per share and revenues of $4.02bn, despite a charge of $154m, or $0.08 per share, on the repayment of the $6.6bn it took from the Troubled Asset Relief Programme (Tarp).<br /><br />US Bancorp, led by chief executive Richard Davis, also enjoyed a boost from record mortgage lending of $16.3bn, tripling its mortgage banking revenue.<br /><br />However, falling house prices and the deterioration in commercial, consumer and commercial real estate loans saw US Bancorp make a $1.4bn provision for credit losses, while net charge-offs reached $929m, both more than double the levels seen in the same quarter of 2008.<br /><br />But non-performing loans declined by 55 per cent to $124m, compared to $273m in the second quarter of 2008.<br /><br />&ldquo;We are not seeing the end of the road here but we are starting to see... repetitive improvement in overall performance of our credit,&rdquo; said Davis.