U.S. Bancorp posted record quarterly revenue of $8 billion and said it expects capital markets to climb from 8 percent of total revenue toward 10 percent or more over the next three to five years, a shift meant to dilute the bank's reliance on net interest income. The firm also signaled it will resume share repurchases within the next quarter or two as retained earnings rebuild regulatory capital ratios.
Capital markets push
Chief Executive Gunjan Kedia said integrating the BTIG broker-dealer acquisition widens the bank's access to corporate advisory and trading fees, pushing fee-based revenue toward half of the total. The target implies a meaningful reweighting of the revenue mix for a super-regional bank that has historically leaned on spread income.
Amazon partnership drives loan growth
The Amazon small business credit card portfolio added roughly $900 million to average loans and $1.7 billion to period-end loans in the third quarter, Chief Financial Officer John Stern said. The co-branded program feeds floating-rate commercial balances that reprice quickly as borrowing costs move, while the accompanying deposit flows help fund the balance sheet at a lower cost.
Margin expansion funds buybacks
Stern said the bank is reinvesting about $10 billion of maturing lower-yielding assets into higher-yielding loans each quarter, a mechanical lift to net interest margin. Combined with expense discipline, the widening margin and retained earnings are expected to rebuild capital ratios sufficiently to restart buybacks that were paused to absorb loan growth.
What to watch
Management flagged broad commercial credit demand, interest rate shifts and deposit pricing discipline as the key variables. Kedia said the model is capable of generating revenue momentum and expense discipline in balance, a formulation that will be tested if loan growth slows or funding costs rise faster than asset yields.