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Overview
U.S. Bancorp (NYSE: USB) is a financial services company that offers consumer banking, commercial lending, Treasury, Credit & Debit cards, payment services and asset & wealth management services. Further, it is the seventh largest bank in the United States by assets.
Wells Fargo (NYSE: WFC) provides commercial banking, consumer banking, insurance, asset & wealth management, investment banking and mortgage services. It is the third largest bank in the U.S. by assets and the largest bank by market capitalization. Further, Wells Fargo originates and services the largest number of mortgages in the country.
In this dashboard, we have analyzed the revenues and key operating metrics of both the banks over recent years.
How do revenues for U.S Bancorp and Wells Fargo compare for the most recent year?
Total Revenue -USB
Revenues (and % contribution) of comparable divisions to the top line of these companies was: (U.S Bancorp vs Wells Fargo)
Community Banking:
$12.3 billion (54.8%) vs $41.3 billion (47.8%)
Wholesale Banking:
$3.8 billion (16.8%) vs $28.7 billion (33.2%)
Wealth & Investment Management:
$2.9 billion (12.7%) vs $16.4 billion (19%)
Total Revenue-WFC
U.S. Bancorp revenues are almost one-fourth the Wells Fargo's Figure.
U.S. Bancorp reported total revenues of $22.5 billion in 2018, which was 74% less than the total revenues of $86.4 billion for Wells Fargo.
Both banks are heavily dependent on Consumer & Community Banking segment, as it has contributed nearly 50% of the total revenues over the last 4 years.
Although Wells Fargo's revenues have struggled over the last 4 years years, U.S. Bancorp has grown at an average annual rate of 4%.
We expect Wells Fargo to report a decline of 3% y-o-y in 2019, whereas U.S. Bancorp revenues would show slight growth.
Total Revenue - U.S Bancorp
Total Revenue - Wells Fargo
YOY change in Total Revenues -USB VS WFC (.....)
Although operating margins of both the banks have shown similar trend over the last 4 years, U.S Bancorp has reported a slightly better figure.
This Implies that U.S Bancorp's operations are more efficient than Wells Fargo.
Operating Margin -USB
Operating Margin
U.S Bancorp Has A Better Asset Turnover Ratio Than Wells Fargo
Assets Turnover Ratio -USB
Assets Turnover Ratio -WFC
Asset Turnover Ratio = Revenue ÷ Average Total Asset
U.S Bancorp's asset turnover ratio of 4.82% in 2018 is 6% higher than that for Wells Fargo, signifying U.S Bancorp is more efficiently using its assets.
Further, U.S Bancorp's Asset Turnover ratio has seen slight improvement over the last 4 years, whereas Wells Fargo's figure is on a negative trajectory.
Although Wells Fargo has significantly higher Net Income than U.S Bancorp, its total assets are more than quadruple of U.S Bancorp's figure. As a result, U.S Bancorp has a better return on assets as compared to its peer.
Return on Assets -USB [=A/B]
Net Income -USB [A]
Total Assets At Year End - USB [B]
Return on assets = Net Income ÷ Average Total Assets
As of 2018, U.S Bancorp's return on assets stood at 1.45% - substantially higher than the 1.09% figure for Wells Fargo.
Return on Assets -WFC [=C/D]
Net Income -WFC [C]
Total Assets At Year End- WFC [D}
However, Wells Fargo has a higher CET1 Capital Ratio than that of U.S Bancorp
CET1 Capital Ratio (Standardized Approach) -USB [=A/B]
CET1 Capital Balance (End of period) -USB [A]
RWA (End of period) -USB [B]
Common Equity Tier I Capital Ratio= Adjusted Common Equity ÷ Risk Weighted Assets
In 2018, U.S Bancorp's CET1 ratio stood at 9.10% which was 22% less than the Wells Fargo's CET1 ratio of 11.74%.
CET1 Capital Ratio (Standardized Approach) -WFC [=C/D]
CET1 Capital Balance (End of period) -WFC [C]
RWA (End of period) -WFC [D]
Wells Fargo has consistently reported a better CET1 ratio than its peer, mainly driven by its higher CET1 capital balance.
Other Key Operating Metrics
Number of Employees -USB
Revenue Per Employee -USB
Compensation per Employee -USB
Wells Fargo has a wider branch banking presence across the globe, which is the main reason behind its higher employee count. It reported 258.7K employees in 2018 which was 253% higher than U.S Bancorp's figure.
Although USB is much smaller than WFC, the difference in revenue per employee is not that significant. U.S Bancorp's revenue per employee was $307K in 2018, which was 8% less than its competitor.
Notably, Compensation per employee figures for both the banks have increased over the last three years.
Wells Fargo has higher compensation cost as compared to U.S Bancorp. It reported per employee compensation of $108.6K in 2018, which was 29% higher than the figure for U.S. Bancorp.
Number of Employees -WFC
Revenue Per Employee -WFC
Compensation per Employee -WFC
Conclusion
Although U.S Bancorp is a much smaller bank compared to Wells Fargo, its operations are more efficient than its peer.U.S Bancorp has significantly lower revenues and small head count as compared to Wells Fargo. However, Its revenue per employee figure is quite close to that of its peer. U.S Bancorp has a higher asset turnover ratio and a better return on assets than that of its peer. However, Wells Fargo has reported a higher CET1 capital ratio over the last 4 years.Further, it has a lower compensation per employee figure which implies better operational efficiency.
Related Analysis
Wells Fargo Stock (NYSE:WFC)Wells Fargo Valuation: Expensive or CheapWells Fargo Revenues: How Does Wells Fargo Make Money?Wells Fargo Earnings: Performance and 2019 ForecastAll Trefis Financial Services Data