Oct 18 (Reuters) – US Bancorp (USB.N) beat estimates for third-quarter profit on Wednesday, as higher interest income from loans offset a hit from bigger credit-loss provisions.
The U.S. Federal Reserve’s aggressive monetary tightening over the past year to tame inflation has boosted profits at consumer-facing banks as customers pay a higher rate on their mortgages and credit card debt.
Net interest income, which is the difference between what banks earn from lending and pay out on deposits, for the third quarter ended Sept. 30 rose 10.7% to $4.27 billion for USB.
It earned $1.05 per share, excluding one-time costs. Analysts had expected a profit of $1.02 per share, according to LSEG data.
But even though lenders have reaped a windfall from interest income, the ‘higher-for-longer’ interest rate environment has soured the outlook for the economy as consumers feel the burn of higher credit costs and lower household budgets.
USB set aside $515 million as provisions anticipating more loan defaults, compared with $362 million a year earlier.
Deposits at banks have been relatively stable in recent months after a sector-wide crisis of confidence earlier this year saw clients pull cash from banks.
Average total deposits at USB were up 3% at $512 billion in the third quarter from a year earlier.
Reporting by Pritam Biswas in Bengaluru; Editing by Krishna Chandra Eluri and Shinjini Ganguli
Our Standards: The Thomson Reuters Trust Principles.
Source: reuters.com
