U.S. Bank (USB), one of the nation’s largest commercial card issuers, posted a paltry 1.1% gain in year-on-year (YOY) outstandings, a weak 4.1% gain in consumer and commercial purchase dollar volume (PDV), as card income crept up a mere 2.7% YOY, according to CardData.
PDV (consumer + business cards) for Q2/15 posted $30.8 billion, compared to $28.1 billion in the prior quarter and $29.6 billion in the year ago quarter.
USB Outstandings were up 1.1% YOY for Q2/15 to $17.6 billion, compared to $17.8 billion in the prior quarter and $17.4 billion in the year ago quarter.
Charge-offs declined 7 bps YOY to 3.85%, up sharply from the prior quarter by 14 bps, and compared to 3.92% one-year ago.
2Q/14: $17.4 billion
3Q/14: $17.8 billion
4Q/14: $18.0 billion
1Q/15: $17.8 billion
2Q/15: $17.6 billion
PURCHASE DOLLAR VOLUME HISTORICAL
2Q/14: $29.6 billion
3Q/14: $30.8 billion
4Q/14: $30.3 billion
1Q/15: $28.1 billion
2Q/15: $30.8 billion
Source: U.S. Bank
Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing.
Payment Services contributed $259 million of the Company’s net income in the second quarter of 2015, compared with $287 million in the second quarter of 2014 and $266 million in the first quarter of 2015. The $28 million (9.8 percent) decrease in the business line’s contribution from the prior year was due to an increase in total noninterest expense and provision for credit losses, partially offset by an increase in total net revenue. Total net revenue increased by $59 million (4.7 percent) year-over-year.
Net interest income increased by $41 million (9.8 percent), primarily due to higher average loan balances and fees and improved loan rates. Total noninterest income was $18 million (2.2 percent) higher year-over-year, due to higher merchant processing services revenue driven by increased transaction volumes and product fees, partially offset by the impact of foreign currency rate changes.
Total noninterest expense increased by $80 million (13.3 percent) over the second quarter of 2014, primarily due to the allocation to the business line of a previously reserved regulatory item. The provision for credit losses increased by $26 million (14.3 percent) primarily due to an unfavorable change in the reserve allocation.
Payment Services’ contribution in the second quarter of 2015 decreased $7 million (2.6 percent) from the first quarter of 2015. Total net revenue increased $65 million (5.2 percent) on a linked quarter basis driven by higher total noninterest income, offset by higher noninterest expense and provision for credit losses. Net interest income was relatively flat compared with the prior quarter. Total noninterest income increased by $73 million (9.4 percent), reflecting an increase in merchant processing revenue due to higher product fees and volumes, and an increase in credit and debit card revenue due to higher transaction volumes, along with an increase in corporate payment products revenue on higher volumes.
Total noninterest expense was $65 million (10.5 percent) higher on a linked quarter basis primarily due to the allocation to the business line of a previously reserved regulatory item. The provision for credit losses was $11 million (5.6 percent) higher on a linked quarter basis due to higher net charge-offs.
Payment Services Net Income
2Q/14: $256 million
3Q/14: $248 million
4Q/14: $269 million
1Q/15: $238 million
2Q/15: 263 million
Source: U.S. Bank
For data, background and forecasts on U.S. Bank: Search CardWeb.com’s CardFlash® Library of more than 58,000 archived articles; Access CardWeb.com’s CardData® for current and historical Performance, Portfolios, Profiles, etc. Visit RAM Research® (ramresearch.com) for quarterly and annual forecasts covering more than 150 metrics. [complimentary or deeply discounted access to CardWeb.com subscribers].
Additional database resources include CardWeb.com’s CardExecs® – comings & goings of payments movers & shakers; CardWeb.com’s CardWatch® – ears & eyes on marketing globally (57K items); and CardWeb.com’s CardPixes® – form & function of card design (7K items).