While spurring demand for mortgages, low interest rates also mean banks earn less on the money they lend. U.S. Bancorp’s net interest margin, the difference between what it pays in deposits and what it charges for loans, narrowed to 3.59 percent from 3.65 percent in the third quarter of last year and widened from 3.58 percent in this year’s second quarter.
CFO Andrew Cecere said on a conference call with analysts today that he expected the margin to narrow a few basis points, or hundredths of a percentage point, in the fourth quarter.
The bank set aside $488 million for soured loans, a 6 percent decline from the third quarter of last year. Net charge- offs dropped 20 percent to $538 million.
Average total loans climbed 7.3 percent to $216.9 billion from the third quarter of last year and increased 1.3 percent from the second quarter, according to the statement. That was driven by a 22 percent rise in commercial loans and a 20 percent increase in residential mortgages.