U.S. Bancorp (NYSE:USB) has reported a strong rise in second-quarter net interest income as it benefitted from rising interest rates and the December 2022 acquisition of MUFG Union Bank (MUB).
However, the Minneapolis-based lender has increased its provision for credit losses to $821 million, up from $311 million in 2Q 2022 - including $243 million related to balance sheet repositioning and capital management actions.
“Credit quality remains strong, however, we continued to strengthen our balance sheet by increasing our loan loss reserve reflecting prudent credit risk management,” CEO Andy Cecere said in a statement.
For the quarter to June 30, 2023, the bank reported a 19% increase in net revenue to $7.18 billion, including $4.45 billion of net interest income and $2.73 billion of non-interest income.
Adjusted diluted earnings per share of $1.12 were down from the previous quarter but 2.8% higher than a year earlier and in line with analysts’ consensus, according to Refinitiv data.
It ended the quarter with $522 billion in total deposits, an increase of 3.2% versus the prior quarter.
The bank noted that the MUB conversion was successfully completed over Memorial Day weekend and over 1.2 million consumer and small business customers were added, of which approximately 50% were digitally active in the first 30 days.
“Entering the second half of this year, we are well-positioned as a national bank with greater scale and the opportunity to capture significant cost synergies from Union Bank and to execute on revenue growth strategies that leverage our digital offerings, payment services capabilities and broad product set,” Cecere added.
US Bancorp’s shares were 6.6% higher at $38.65 in early afternoon trading.
Contact the author at stephen.gunnion@proactiveinvestors.com