Are U.S. Bancorp's Cost Cutting Plans a Preview of What's to Come in the Industry?
Over the last 18 months, U.S. Bancorp (NYSE: USB) has reduced its branch footprint by about 10%. The plan was ultimately to shrink the footprint by 10% to 15% by early 2021. Now, executives at the bank say they intend to cut an additional 15%, which equates to closing more than 400 more branches, according to the bank's latest count. I think you may see more banks follow suit as they look to cut expenses and as digital banking becomes more mainstream.
Image source: Getty Images.
There is not a lot that banks can do to increase earnings in the near term. Most of them had their best performance of the year in the third quarter, but that's only because they didn't need to build reserves for loan losses like they did in the first half of the year. With interest rates around zero, net interest income is going to be challenged, especially with loan demand so low right now. Additionally, many banks that have been buoyed by big trading and investment bank divisions expect activity to start to normalize soon.
Source Fool.com
