Minneapolis-based U.S. Bancorp saw its first quarter revenue drop by 5.2 percent to $5.47 billion. That was roughly on par with a 5 percent decline in interest income compared to the first quarter of 2020. The bank also saw its operating income decline 14.9 percent compared to a year ago.
But at the bottom line, its net income nearly doubled: up 94.7 percent to $2.28 billion compared to a year ago. The bank benefitted from lowering its allowance for credit losses and recording a $1.05 billion gain on its earnings statement.
“A lot has changed in the last year, and our first quarter results were reflective of improving economic conditions and increasing consumer confidence and spending activity. Credit quality continues to perform better than we had expected – in fact, we incurred the bank’s lowest net charge-off ratio in recent decades – and an improved outlook for future performance allowed us to release over a billion dollars in reserves for credit losses,” said Andy Cecere, U.S. Bancorp’s chairman, president and CEO, in a statement.
The bank’s income attributable to its payment services business was up 58.1 percent to $479 million for the first quarter.
The payment services business includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing.
According to the company’s statement on the payment services business line:
“Consumer spending continues to strengthen across most sectors driven by government stimulus, local jurisdictions reducing restrictions and consumer behaviors normalizing resulting in payments revenues being essentially flat. Payments revenue included higher credit and debit card revenue driven by higher net interchange revenue related to sales volumes and higher prepaid fees as a result of government stimulus programs, offset by lower corporate payment products revenue primarily due to lower business spending related to travel and entertainment and lower merchant processing services revenue driven by lower sales volume and merchant fees.”