U.S. Bancorp on Oct. 19 reported positive third-quarter earnings driven by increases in fee-based revenue, including higher payments-related income.
Payments-related revenue was up 6%, to $830 million from $783 million during the same period ended Sept. 30 last year. Of that total, credit and debit card revenue rose 5.5%, to $289 million from $274 million, and corporate payment products revenue was up 6.3%, to $203 million from $191 million.
Corporate payments revenue benefited from seasonally high transaction volumes, the company noted in its earnings release.
Merchant-processing revenue through U.S. Bank’s Elavon subsidiary was up 6.3%, to $338 million from $318 million. ATM processing services revenue rose 9.5%, to $115 million from $105 million, driven by increased transaction volume, the company said.
As a company, total net revenue totaled $4.79 billion, up 4.4% from $4.59 billion. Net income was $ 1.25 billion, up 39.8% from $894 million.
Richard K. Davis, U.S. Bancorp chairman, president and CEO, lauded the bank’s efforts, particularly with regard to corporate payments.
“Twenty years ago, the legacy of this bank started a corporate payments business, which you know is a huge government provider of card-based payments,” Davis told analysts during an Oct. 19 conference call to discuss earnings. He noted that U.S. Bank was moving money electronically long before it became the trend. “And all that continues to grow and expand in terms of the capabilities we have. So this corporate payments world is going to become very robust for us.”
Davis also pointed to the bank’s payment-technology efforts, which include adding remote deposit capture in March and mobile alerts to debit cards in August (
Asked about the overall competitive environment for credit cards, Davis referred to U.S. Bank’s Oct. 11 deal to provide mobile credit card account approval at REI Inc. stores (
The bank deals with customers “at a very high credit quality level so that we are not reaching down to try to grow the balance sheet at the risk of putting some less prime customers on in the future,” he said. “We don’t have anybody in our portfolio that isn’t creditworthy because we didn’t have them in the first place.”
Consumers are using credit cards moderately and are “husbanding cash on the deposit side, … and [they] are very, very careful using their money on the credit side,” Davis said. Consumers are likely to use credit cards at stores during the holiday season, but they also will pay those balances down, he noted
The Minneapolis-based bank’s provision for credit losses dropped 47.8%, to $519 million from $995 million during the third quarter of 2010.
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