* Mortgage banking revenue falls 11 pct to $401 mln
* Q1 net profit $1.43 bln vs $1.34 bln year earlier
* Provision for credit losses falls 16 pct to $403 mln
* Shares down 3 pct
April 16 U.S. Bancorp, the fifth-largest
U.S. commercial bank by assets, reported a first-quarter profit
that met analysts' expectations but the lender's net interest
margins narrowed and mortgage-banking revenue fell, sending its
shares down nearly 3 percent.
With interest rates at historical lows, lending profits are
broadly lower across the industry. Banks' highest-yielding
assets are maturing, only to be replaced with lower-yielding
ones, and funding costs are not falling nearly as much.
U.S. Bancorp's net interest margin, a closely watched
measure of how much money banks make from their loans, fell to
3.48 percent from 3.60 percent a year earlier.
JPMorgan Chase & Co and Wells Fargo & Co
also reported a drop in net interest margins in their latest
U.S. Bancorp said mortgage banking revenue fell 11 pct to
$401 million as fewer borrowers refinance at low interest rates.
"Fee revenue in the first quarter was impacted by a
reduction in mortgage banking revenue as application volumes
dropped for our company and the industry," Chief Executive
Richard Davis said in a statement.
However, Chief Financial Officer Andy Cecere said in a
conference call that he expects mortgage banking revenue to rise
in the second quarter as application volumes increase.
BMO analyst Peter Winter said that though mortgage volumes
might increase in the second quarter, it will still be lower
than a year earlier.
U.S. Bancorp's average total loans rose 5.8 percent, helped
by solid demand for commercial loans.
Net profit rose to $1.43 billion, or 73 cents per share, for
the first quarter ended March 31, from $1.34 billion, or 67
cents per share, a year earlier.
The results were in line with analysts' expectations,
according to Thomson Reuters I/B/E/S.
Provision for credit losses fell 16 percent to $403 million
while non-interest expenses dropped more than 3 percent.
U.S. Bancorp was one of the many banks to have cleared the
Federal Reserve's annual stress test earlier this year. As of
March 31, the bank's Tier 1 capital ratio was 11 percent.
The Minneapolis-based bank's shares were down 1.9 percent at
$32.67 on the New York Stock Exchange. The stock has risen about
3 percent since the beginning of the year.