What Are USB’s Key Growth Drivers?

What drove revenue?

U.S. Bancorp’s (USB) revenue net of interest expense grew 5% and 4% in 2016 and 2017, respectively. Net interest income grew 5% and 6% in 2016 and 2017, respectively. Noninterest income grew 5% in 2016 and remained flat in 2017.

What Are USB’s Key Growth Drivers?

What drove the diluted EPS?

Noninterest expense rose 7% in 2016 and 11% in 2017. Income before income taxes grew 3% and fell 6% in 2016 and 2017, respectively. Diluted EPS grew 3% and 8% in 2016 and 2017, respectively. Share buybacks have further enhanced the EPS numbers.

Dividend yield

Dividend yield gained slightly in 2017 after a drop due to growth in dividend and lower price gains. U.S. Bancorp’s dividend yield of 2.1% and PE of 16.1x compares to a sector average dividend yield of 2% and a PE of 20.7x. Prices gained 20%, 4%, and 5% in 2016, 2017, and on a YTD basis, respectively.

What Are USB’s Key Growth Drivers?

Company versus the broad indexes

The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.2% and a PE ratio of 24.6x. Prices gained 10%, 19%, and 5% in 2016, 2017, and on a YTD basis, respectively.

The Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.1% and a PE ratio of 24.9x. Prices gained 13%, 25%, and 5% in 2016, 2017, and on a YTD basis, respectively.

The NASDAQ Composite (COMP-INDEX) (ONEQ) has a PE ratio of 25.4x. Prices gained 8%, 28%, and 6% in 2016, 2017, and on a YTD basis, respectively.

Going forward

During 2017, the company saw three increases in prime lending rates, the introduction of mobile payments for Visa and commercial cards, and innovative digital payment solutions. It formed a partnership to offer virtual payment technology to US travel agencies. It offers mobile money transfer without the need for cash or checks. It also introduced a digital portal for mortgage applicants, so now a customer can check an account balance or make a payment to a credit card with a verbal command.

Bank loan ETFs

The PowerShares Senior Loan ETF (BKLN) has a dividend yield of 3.5%. The SPDR Blackstone/GSO Senior Loan ETF (SRLN) has a dividend yield of 4%.