We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fifth Third (FITB) Q2 Earnings Beat, Revenues Rise on NII
Read MoreHide Full Article
Fifth Third Bancorp (FITB - Free Report) has reported second-quarter 2023 adjusted earnings per share (EPS) of 87 cents, surpassing the Zacks Consensus Estimate of 83 cents. In the prior-year quarter, the company reported an EPS of 76 cents.
Increases in the fee income and net interest income (NII) aided revenue growth, while higher expenses acted as an undermining factor.
The company has reported net income available to common shareholders of $562 million, up 7% year over year. Our estimate for the same was $568.5 million.
Revenues Rise on Higher NII, Expenses Increase
Total revenues in the reported quarter were $2.18 billion, up 8% year over year. However, the figure missed the Zacks Consensus Estimate of $2.19 billion.
Fifth Third’s NII (on an FTE basis) was $1.46 billion, up 9% year over year. Our estimate for the same was $1.50 billion. The rise primarily reflects the benefits of higher market rates, and growth in C&I loan balances and investment portfolio balances, partially offset by the deposit mix shift from demand to interest-bearing accounts.
The net interest margin (NIM) (on a FTE basis) rose 18 basis points (bps) year over year to 3.10%.
Non-interest income increased 7% year over year to $726 million. Our estimate for the same was $686.6 million. This was primarily due to a rise in commercial banking revenues, wealth and asset management revenues, and mortgage banking net revenues, partly offset by lower service charges on deposits and leasing business revenues.
Non-interest expenses increased 11% to $1.23 billion. Our estimate for the same was $1.25 billion. The main reasons for the rise were an increase in marketing expenses, technology and communications expenses, compensation and benefits, and net occupancy expenses.
As of Jun 30, 2023, average loan and lease balances, and average total deposits were $123.3 billion and $160.85 billion, respectively, increasing marginally on a sequential basis.
Credit Quality Deteriorates
The company reported a provision for credit losses of $177 million compared with $179 million in the year-ago quarter.
However, net losses charged-off in the second quarter were $90 million or 0.29% of average loans and leases (on an annualized basis) compared with the $62 million or 0.21% witnessed in the prior-year quarter. The total allowance for credit losses increased 15.1% to $2.53 billion. Moreover, the total non-performing assets were $663 million, up 18.6% from the year-ago quarter.
Capital Position Strong
Tier 1 risk-based capital ratio was 10.78% compared with the 10.23% posted at the end of the prior-year quarter. The CET1 capital ratio was 9.53%, down from the 8.95% recorded at the end of the year-ago quarter. Also, the leverage ratio was 8.81% compared with the year-earlier quarter’s 8.30%.
Our Viewpoint
The rise in revenues of the company was backed by increased NII. The improvement in NIM was backed by higher rates. However, a deterioration in credit quality and increased expenses were concerning.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Wells Fargo & Company’s (WFC - Free Report) second-quarter 2023 earnings per share of $1.25 outpaced the Zacks Consensus Estimate of $1.15. The figure improved 66.7% year over year.
Results of WFC benefited from higher NII and non-interest income. Improvements in capital and profitability ratios were other positives. However, higher provisions for credit losses and a rise in expenses were the undermining factors.
Citigroup Inc.’s (C - Free Report) second-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.37 outpaced the Zacks Consensus Estimate of $1.31.
In the second quarter, C witnessed a decline in the top line due to lower revenues in the Institutional Clients Group. The higher cost of credit was another spoilsport. Nonetheless, higher revenues in the Personal Banking and Wealth Management segments were tailwinds.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Fifth Third (FITB) Q2 Earnings Beat, Revenues Rise on NII
Fifth Third Bancorp (FITB - Free Report) has reported second-quarter 2023 adjusted earnings per share (EPS) of 87 cents, surpassing the Zacks Consensus Estimate of 83 cents. In the prior-year quarter, the company reported an EPS of 76 cents.
Increases in the fee income and net interest income (NII) aided revenue growth, while higher expenses acted as an undermining factor.
The company has reported net income available to common shareholders of $562 million, up 7% year over year. Our estimate for the same was $568.5 million.
Revenues Rise on Higher NII, Expenses Increase
Total revenues in the reported quarter were $2.18 billion, up 8% year over year. However, the figure missed the Zacks Consensus Estimate of $2.19 billion.
Fifth Third’s NII (on an FTE basis) was $1.46 billion, up 9% year over year. Our estimate for the same was $1.50 billion. The rise primarily reflects the benefits of higher market rates, and growth in C&I loan balances and investment portfolio balances, partially offset by the deposit mix shift from demand to interest-bearing accounts.
The net interest margin (NIM) (on a FTE basis) rose 18 basis points (bps) year over year to 3.10%.
Non-interest income increased 7% year over year to $726 million. Our estimate for the same was $686.6 million. This was primarily due to a rise in commercial banking revenues, wealth and asset management revenues, and mortgage banking net revenues, partly offset by lower service charges on deposits and leasing business revenues.
Non-interest expenses increased 11% to $1.23 billion. Our estimate for the same was $1.25 billion. The main reasons for the rise were an increase in marketing expenses, technology and communications expenses, compensation and benefits, and net occupancy expenses.
As of Jun 30, 2023, average loan and lease balances, and average total deposits were $123.3 billion and $160.85 billion, respectively, increasing marginally on a sequential basis.
Credit Quality Deteriorates
The company reported a provision for credit losses of $177 million compared with $179 million in the year-ago quarter.
However, net losses charged-off in the second quarter were $90 million or 0.29% of average loans and leases (on an annualized basis) compared with the $62 million or 0.21% witnessed in the prior-year quarter. The total allowance for credit losses increased 15.1% to $2.53 billion. Moreover, the total non-performing assets were $663 million, up 18.6% from the year-ago quarter.
Capital Position Strong
Tier 1 risk-based capital ratio was 10.78% compared with the 10.23% posted at the end of the prior-year quarter. The CET1 capital ratio was 9.53%, down from the 8.95% recorded at the end of the year-ago quarter. Also, the leverage ratio was 8.81% compared with the year-earlier quarter’s 8.30%.
Our Viewpoint
The rise in revenues of the company was backed by increased NII. The improvement in NIM was backed by higher rates. However, a deterioration in credit quality and increased expenses were concerning.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Fifth Third Bancorp price-consensus-eps-surprise-chart | Fifth Third Bancorp Quote
Currently, Fifth Third carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Banks
Wells Fargo & Company’s (WFC - Free Report) second-quarter 2023 earnings per share of $1.25 outpaced the Zacks Consensus Estimate of $1.15. The figure improved 66.7% year over year.
Results of WFC benefited from higher NII and non-interest income. Improvements in capital and profitability ratios were other positives. However, higher provisions for credit losses and a rise in expenses were the undermining factors.
Citigroup Inc.’s (C - Free Report) second-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.37 outpaced the Zacks Consensus Estimate of $1.31.
In the second quarter, C witnessed a decline in the top line due to lower revenues in the Institutional Clients Group. The higher cost of credit was another spoilsport. Nonetheless, higher revenues in the Personal Banking and Wealth Management segments were tailwinds.