U.S. Bancorp May See 3% Net Interest Income Growth in 2025, But Regulatory Capital Goals May Limit Share Buyback Pace: Analyst

Goldman Sachs analyst Richard Ramsden reiterated the Neutral rating on U.S. Bancorp USB, lowering the price forecast to $49.

Last week, the company reported fourth quarter adjusted earnings per share of $1.07, beating the street view of $1.05.

Quarterly sales of $6.98 billion marginally missed the analyst consensus estimate of $6.996 billion.

The analyst projects the company’s net interest income to grow 3% year-over-year in 2025, which is lower than peers due to limited upside from fixed asset repricing.

However, Ramsden sees an accelerated loan growth in the second half of 2025, potentially boosting  net interest income.

U.S. Bancorp’s CET1 ratio stands at 10.6%, with an estimated adjusted ratio of 8.6%, above the regulatory minimum of 7.6%, but still below the 10% target for Category II banks, the analyst writes.

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The company is expected to maintain a cautious approach to share buybacks, balancing capital distribution with the need for further capital build-up as it moves toward becoming a Category II bank by 2027.

The analyst’s 2025 and 2026 earnings per share (EPS) estimates remain largely unchanged, with a new 2027 EPS estimate of $5.35 and an unchanged P/E target of 11.5x for 2025.

However, Ramsden forecasts a few downside risks for the stock, which include slower revenue growth than forecast, lower cost savings from the integration of Union Bank, a greater increase in credit losses, and the risk of higher regulatory, IT, and compliance costs.

Price Action: USB shares are trading higher by 1.63% to $49.15 at last check Tuesday.

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