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.
Second-quarter net income fell to $221m (£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.
The bank outperformed an analysts’ 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).
US Bancorp, led by chief executive Richard Davis, also enjoyed a boost from record mortgage lending of $16.3bn, tripling its mortgage banking revenue.
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.
But non-performing loans declined by 55 per cent to $124m, compared to $273m in the second quarter of 2008.
“We are not seeing the end of the road here but we are starting to see… repetitive improvement in overall performance of our credit,” said Davis.