On July 19th, US Bancorp (USB.N), a prominent American bank issued a forecast for its full-year net interest income (NII)
that fell below Wall Street’s estimates, resulting in a more than 1% decline in the bank’s shares during premarket trading on Wednesday.
Despite lenders benefiting from higher interest income due to a substantial rise in interest rates by the Federal Reserve to combat decades-high inflation
US Bancorp’s NII projection remains weak.
The Minneapolis-based bank now anticipates its full-year NII
which measures the difference between interest earned on loans and interest paid on deposits
to fall within the range of $17.5 billion to $18.0 billion. However, analysts, on average, had expected a higher figure of $18.1 billion, as reported by Refinitiv data.
For the quarter ending on June 30, the bank’s NII showed improvement, reaching $4.45 billion, compared to $3.46 billion during the same period last year.
US Bancorp reported an adjusted profit of $1.12 per share, aligning with analysts’ expectations.
However, the bank’s total average deposits experienced a sequential decline of 2.6%, settling at $497.27 billion
while still showing a year-on-year increase of 9%.
To address potential risks, US Bancorp set aside $821 million as provisions for bad loans during the quarter
a notable increase compared to $311 million reserved during the same period a year ago.
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