One of the nation’s largest commercial card issuer is expected to report $17.8 billion in outstandings and $16.8 billion in purchase dollar volume (PDV) for the second quarter, according to RAM Research. CardData reports U.S. Bank posted an 6.3% year-on-year (YOY) increase in purchase dollar volume (PDV) in the first quarter (Q1/15).
U.S. Bank (USB) revenues were relatively flat for its card and corporate payments business but strong growth in merchant processing drove net (after tax) income up 25% YOY.
PDV for Q1/15 posted $15.3 billion, compared to $17.1 billion in the prior quarter and $14.4. billion in the year ago quarter. USB Outstandings were up 2.2% YOY for Q1/15 to $17.8 billion, compared to $18.0 billion in the prior quarter and $17.4 billion in the year ago quarter.
Charge-offs declined 25 bps YOY to 3.71%, up sharply from the prior quarter, and compared to 3.96% one-year ago.
1Q/14: $17.4 billion
2Q/14: $17.4 billion
3Q/14: $17.8 billion
4Q/14: $18.0 billion
1Q/15: $17.8 billion
2Q/15: $18.0 billion
PURCHASE DOLLAR VOLUME HISTORICAL
1Q/14: $14.4 billion
2Q/14: $16.2 billion
3Q/14: $16.4 billion
4Q/14: $17.1 billion
1Q/15: $15.3 billion
2Q/15: $16.8 billion
Source: U.S. Bank
Payment Services contributed $262 million of the Company’s net income in the first quarter of 2015, compared with $238 million in the first quarter of 2014 and $300 million in the fourth quarter of 2014. The $24 million (10.1 percent) increase in the business line’s contribution over the prior year was due to an increase in total net revenue, partially offset by an increase in total noninterest expense. Total net revenue increased by $53 million (4.5 percent) year-over-year. Net interest income increased by $51 million (12.3 percent), primarily due to higher average loan balances and fees and improved loan rates. Total noninterest income was $2 million (0.3 percent) higher year-over-year, due to higher merchant processing services revenue driven by increased product fees and transaction volumes, partially offset by the impact of foreign currency rate changes.
Total noninterest expense increased by $20 million (3.3 percent) over the first quarter of 2014, primarily due to higher net shared services expense and compensation and employee benefits expense related to higher pension costs, partially offset by reductions in professional services, marketing, and other intangibles expense. The provision for credit losses decreased by $4 million (2.0 percent) due to lower net charge-offs, partially offset by an unfavorable change in the reserve allocation.
Payment Services’ contribution in the first quarter of 2015 decreased $38 million (12.7 percent) from the fourth quarter of 2014. Total net revenue decreased $70 million (5.3 percent) on a linked quarter basis driven by lower total noninterest income. Net interest income decreased by $4 million (0.9 percent) from the fourth quarter due to fewer days in the quarter and lower average loan balances, partially offset by higher loan rates. Total noninterest income decreased by $66 million (7.8 percent), primarily due to a decrease in credit and debit card revenue due to seasonally lower transaction volumes and fewer processing days, and lower merchant processing revenue due to seasonally lower transaction volumes, fewer processing days and the impact of foreign currency rate changes. Total noninterest expense was $15 million (2.4 percent) lower on a linked quarter basis primarily due to lower professional services and intangibles expenses. The provision for credit losses was $4 million (2.1 percent) higher on a linked quarter basis due to higher net charge-offs, partially offset by a favorable change in the reserve allocation.
Payment Services Net Income
1Q/14: $238 million
2Q/14: $285 million
3Q/14: $303 million
4Q/14: $300 million
1Q/15: $262 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].
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