US Bancorp sees a solid start to the economy in 2022, but earnings declined from last year’s setback

US Bancorp’s revenue and credit base grew solidly for the first three months of the year, but its profit fell due to an anomaly early last year.

The Minneapolis-based banking corporation announced this morning that it made $1.6 billion in the first quarter on sales of $5.6 billion.

Portraying a solid economy, executives noted gains in the credit card business, fueled by increased spending on travel and entertainment, which had been impacted by the pandemic over the past two years. They noted continued uncertainty due to energy prices and the war in Ukraine.

“Our results benefited from healthy trends in consumer and business activity,” Andy Cecere, the company’s chief executive officer, said in a statement.

“We’ve seen very strong loan growth driving solid net interest income growth,” Cecere said, referring to its largest source of income. “Our growth in fee income was supported by improving operations and new business gains.”

U.S. bank stocks are up about 1% in premarket trade reports.

The company’s net income declined 31% from $2.3 billion for the same period last year, when it was offset by the reinstatement of approximately $800 million earmarked for potential losses early in the pandemic in 2020. was raised.

Many banks undertook similar protective maneuvers in 2020 and then recovered the suspended funds when losses failed to materialize. This has skewed the financial results of these companies in both directions.

The U.S. bank set aside $112 million for potential loan losses last quarter. The company routinely set aside about $300 million for potential losses each quarter in 2018 and 2019.

Net interest income, which accounts for two-thirds of the US bank’s total income, grew 3.6%, outpacing the 2.3% growth in overall income. This increase was due to higher loan balances and despite a slight decrease in net interest margin, which is the difference between interest earned on loans and interest paid on deposits.

The company said its total loans rose 6.5% year over year, led by a sharp rise in commercial loans. Residential mortgage loans rose 3%, but home equity loans and second mortgages fell nearly 14%, reflecting housing shortages and the first rise in interest rates in several years.