Moody’s views U.S. Bancorp negatively

Moody’s Investors Service said it changed its outlook for U.S. Bancorp (USB) and its subsidiaries to negative from ratings under review. The agency started the review on Aug. 7.

Moody’s also confirmed USB's ratings, including its A3 senior unsecured local- and foreign-currency ratings and its subsidiary, U.S. Bank NA’s A2 senior unsecured local-currency rating.

However, the agency noted the elevated interest rates and the bank's historic higher-than-peer average tolerance for variations in economic equity due to changes in interest rates have hurt USB’s balance sheet and capitalization.

“The rating outlook following the confirmation is negative reflecting the challenges that USB may face towards improving its capitalization and profitability metrics while maintaining a sound funding and liquidity profile, which is heightened because of higher-for-longer interest rates, slower economic growth and recession risks,” the agency said in a press release.

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