U.S. Bank's (USB) Return on Equity is Greater than Wells Fargo (WFC)

posted Feb 2, 2018, 10:06 PM by Intelligent Investor   [ updated Feb 3, 2018, 8:20 AM ]
We just realized that U.S. Bank's (USB) Return on Equity is the highest out of all the major banks. It is greater than Wells Fargo (WFC), J.P. Morgan (JPM), and Bank of America (BAC).

 Company  Return on Equity
 U.S. Bank (USB)  13%
 Wells Fargo (WFC)  11%
 J.P. Morgan (JPM)  11%
 Bank of America (BAC)  8%
 Citibank (C)  7%
Table 1: U.S. Bank has the highest Return on Equity when compared to other major banks.

The P/E Ratio is around 15 which is expensive compared to Wells Fargo, but we believe that the Federal Reserve's decision to end Quantitative Easing will raise the interest rates and thus make the bank more profitable. Banks make more money when interest rates go higher. Therefore, we ended up purchasing shares of U.S. Bank (USB).

Disclosure: We own shares of U.S. Bank (USB)