U.S. Bancorp reported second-quarter net income of $2.177 billion and diluted earnings per share of $1.35, up about 22% year on year, on record net revenue of $7.712 billion, the Minneapolis-based lender said in its quarterly release on Thursday.
The results were driven by broad-based revenue growth, with net interest income rising 7.5% year on year on a taxable-equivalent basis and fee revenue up 13.2%, according to the earnings release published on the group's website. The combination pushed total net revenue to a record.
FEE MOMENTUM OUTPACES SPREAD INCOME
The 13.2% rise in fee revenue outpaced the 7.5% growth in net interest income and reflected higher revenue across all fee categories, including card, corporate payment and treasury management, trust and investment management, and capital markets revenue, which included the contribution from BTIG, acquired on 1 June. Chief executive Gunjan Kedia cited "broad-based fee income momentum".
Net interest income growth of 7.5% on a taxable-equivalent basis was primarily due to loan growth, an improved earning asset mix and benefits from fixed asset repricing, and the net interest margin rose to 2.79% from 2.66%. Average total loans rose 7.1% year on year.
SCALE BENEFITS FEED PROFITABILITY
The 22% year-on-year rise in diluted EPS to $1.35 came with 400 basis points of positive operating leverage, as total net revenue rose 10.1% and noninterest expense rose 5.9%.
Net income rose 20% year on year, the return on tangible common equity was 18.7% and the net charge-off ratio improved to 0.53% from 0.59%. Kedia said the bank entered the second half of the year "with a favorable economic backdrop and strong momentum".