U.S. Bancorp counting on payments split to drive revenue growth

In her first extended comments since being tapped to succeed the retiring Andy Cecere, U.S. Bancorp CEO-designate Gunjan Kedia said strengthening the performance of the Minneapolis-based company’s payments group ranked among her most urgent priorities.  

“It is a marquee franchise that has not delivered its promise yet, and we have very focused strategies around that,” Kedia, currently U.S. Bancorp’s president, said Tuesday at the UBS Financial Services Conference in Key Biscayne, Florida. 

The $678.3 billion-asset U.S. Bancorp announced plans to split the payments business between merchant and institutional and consumer and small business segments in October. Speaking Tuesday, Kedia described the decision as an effort to better integrate the payments operations with the businesses they align with. “It’s an execution play and really doubling down our interconnectedness,” Kedia said.

The payments split followed the decision by Shailesh Kotwal, U.S. Bancorp’s longtime vice chair of payments services, to retire. Kotwal first announced his plans to depart in August. He stepped down last week. Kotwal plans to stay through June to support the leadership transition. U.S. Bancorp named Chief Transition Officer Mark Runkel to head the merchant and industrial side of the payments business in November. In January, it hired veteran American Express executive Courtney Kelso to oversee consumer and small business payments.  

Payments generated approximately $4.2 billion in revenue for U.S. Bancorp in 2024, up 3% over the 2023 result. Though Kedia stopped short of disclosing specific targets, she said driving growth in the payments space would be critical to U.S. Bancorp’s overall success. 

“Our conviction here is that the more we structurally embed our money movement and payments capabilities in all our products, the more enduring our client relationships will be, the more attractive that client relationship is,” Kedial said. “The question is easier said than done, and you have to focus on the execution of it.”

Al Drago/Bloomberg

Splitting payments would allow both sides of the business to focus more intently on growth opportunities, according to Cecere, who is stepping down April 15. “It is really a focus on emphasis, prioritization and opportunity, and recognizing how big that is for us and how important it is,” Cecere said in December at Goldman Sachs U.S. Financial Services Conference in New York. 

U.S. Bancport acquired Salucro, a Tempe, Arizona-based healthcare payments platform in August, integrating it into its existing Elevon payment processing business. Kedia said Tuesday she plans to focus on organic growth. Additional deals — even small, nonbank transactions — would be unlikely. “Our focus is very much on organic growth,” Kedia said. 

Chief Financial Officer John Stern said the company has seen an uptick in business confidence since the presidential election in November. “Market sentiment is definitely improving,” Stern said. “There’s a lot of enthusiasm for this economy in terms of pro-growth, pro-business, these sorts of things from our clients. We are hopeful and we do see modest improvement in pipelines and things like that.”

Wells Fargo Chief Financial Officer Michael Santomassimo, who also spoke at the UBS conference, delivered a similar message. “I think there’s certainly this optimism that the administration is going to be much more pro-growth, pro-business, remove a lot of the obstacles that may get in the way of growing the economy,” Santomassimo said. “We still expect to see that momentum build throughout the year.”

Stern, for his part, reiterated previous guidance pointing to full-year 2025 revenue growth in the 3% to 5% range. U.S. Bancorp reported revenue totaling $27.5 billion for 2024.

Investors seemed satisfied with Kedia’s messaging. U.S. Bancorp shares were trading up nearly 2%, at $47.59, Tuesday afternoon.