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Fifth Third (FITB) Q4 Earnings Beat, Revenues Decline Y/Y
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Fifth Third Bancorp (FITB - Free Report) has reported fourth-quarter 2023 adjusted earnings per share (EPS) of 99 cents, surpassing the Zacks Consensus Estimate of 90 cents. In the prior-year quarter, the company reported an EPS of $1.01.
Results have been aided by increases in non-interest income and the deposit balance. However, a fall in net interest income (NII) limited its revenue growth. Higher expenses were other undermining factors.
The company has reported net income available to common shareholders of $492 million, down 30% year over year.
For 2023, net income was $2.3 billion compared with $2.4 billion in the previous year.
Revenues Fall, Expenses Increase
Total revenues in the reported quarter were $2.16 billion, marginally down year over year. The top line surpassed the Zacks Consensus Estimate of $2.15.
For 2023, total revenues in the reported quarter were $8.73 billion, up 4% year over year. The top line surpassed the Zacks Consensus Estimate of $8.71 billion.
Fifth Third’sNII (on an FTE basis) was $1.42 billion, down 10% year over year. Our estimate for NII was pegged at $1.42 billion.
The net interest margin (NIM) (on an FTE basis) shrunk year over year to 2.85% from 3.35%. Our estimate for NIM was pinned at 3.02%.
Non-interest income increased 1% year over year to $744 million. This was primarily due to a rise in service charges on deposits, commercial banking revenues, and wealth and asset management revenues. Our estimate for the metric was pegged at $730.7 million.
Non-interest expenses increased 19% year over year to $1.45 billion. An increase in almost all components of expenses resulted in this upsurge, except for leasing business costs and marketing expenses. Our estimate for the metric was pinned at $1.19 billion.
As of Dec 31, 2023, average loan and lease balances, and average total deposits were $118.8 billion and $169.4 billion, respectively. Average loans and deposits increased 2.3% on a sequential basis.
Credit Quality Deteriorates
The company reported a provision for credit losses of $55 million compared with $180 million in the year-ago quarter.
However, net loss charge-offs in the fourth quarter were $96 million or 0.32% of average loans and leases (on an annualized basis) compared with the $68 million or 0.22% witnessed in the prior-year quarter. The total allowance for credit losses increased 3.2% to $2.48 billion. Moreover, total non-performing assets were $689 million, up 27.8% from the year-ago quarter.
Capital Position Strong
The Tier 1 risk-based capital ratio was 11.59% compared with the 10.53% posted at the end of the prior-year quarter. The CET1 capital ratio was 10.29%, up from the 9.28% recorded at the end of the year-ago quarter. Also, the leverage ratio was 8.73% compared with the year-earlier quarter’s 8.56%.
Our Viewpoint
Revenues of the company were backed by a rise in non-interest income for this quarter. Its diverse revenue base and strategic acquisitions will likely drive top-line growth in the upcoming period. However, the weakening of credit quality and elevated expenses have been concerning.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with the $1.65 registered in the year-ago quarter.
HWC’s results were impacted by declines in NII and non-interest income. Further, a slight decrease in loan balances, and increases in expenses and provisions acted as spoilsports.
Synovus Financial Corp.’s (SNV - Free Report) fourth-quarter adjusted earnings per share of 80 cents lagged the Zacks Consensus Estimate of 94 cents. Also, adjusted earnings compared unfavorably with the $1.35 earned in the year-ago quarter.
Results were adversely impacted by declines in NII and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors. However, a modest increase in deposits provided some support to SNV’s quarterly performance.
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Fifth Third (FITB) Q4 Earnings Beat, Revenues Decline Y/Y
Fifth Third Bancorp (FITB - Free Report) has reported fourth-quarter 2023 adjusted earnings per share (EPS) of 99 cents, surpassing the Zacks Consensus Estimate of 90 cents. In the prior-year quarter, the company reported an EPS of $1.01.
Results have been aided by increases in non-interest income and the deposit balance. However, a fall in net interest income (NII) limited its revenue growth. Higher expenses were other undermining factors.
The company has reported net income available to common shareholders of $492 million, down 30% year over year.
For 2023, net income was $2.3 billion compared with $2.4 billion in the previous year.
Revenues Fall, Expenses Increase
Total revenues in the reported quarter were $2.16 billion, marginally down year over year. The top line surpassed the Zacks Consensus Estimate of $2.15.
For 2023, total revenues in the reported quarter were $8.73 billion, up 4% year over year. The top line surpassed the Zacks Consensus Estimate of $8.71 billion.
Fifth Third’sNII (on an FTE basis) was $1.42 billion, down 10% year over year. Our estimate for NII was pegged at $1.42 billion.
The net interest margin (NIM) (on an FTE basis) shrunk year over year to 2.85% from 3.35%. Our estimate for NIM was pinned at 3.02%.
Non-interest income increased 1% year over year to $744 million. This was primarily due to a rise in service charges on deposits, commercial banking revenues, and wealth and asset management revenues. Our estimate for the metric was pegged at $730.7 million.
Non-interest expenses increased 19% year over year to $1.45 billion. An increase in almost all components of expenses resulted in this upsurge, except for leasing business costs and marketing expenses. Our estimate for the metric was pinned at $1.19 billion.
As of Dec 31, 2023, average loan and lease balances, and average total deposits were $118.8 billion and $169.4 billion, respectively. Average loans and deposits increased 2.3% on a sequential basis.
Credit Quality Deteriorates
The company reported a provision for credit losses of $55 million compared with $180 million in the year-ago quarter.
However, net loss charge-offs in the fourth quarter were $96 million or 0.32% of average loans and leases (on an annualized basis) compared with the $68 million or 0.22% witnessed in the prior-year quarter. The total allowance for credit losses increased 3.2% to $2.48 billion. Moreover, total non-performing assets were $689 million, up 27.8% from the year-ago quarter.
Capital Position Strong
The Tier 1 risk-based capital ratio was 11.59% compared with the 10.53% posted at the end of the prior-year quarter. The CET1 capital ratio was 10.29%, up from the 9.28% recorded at the end of the year-ago quarter. Also, the leverage ratio was 8.73% compared with the year-earlier quarter’s 8.56%.
Our Viewpoint
Revenues of the company were backed by a rise in non-interest income for this quarter. Its diverse revenue base and strategic acquisitions will likely drive top-line growth in the upcoming period. However, the weakening of credit quality and elevated expenses have been 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 Banks
Hancock Whitney Corp.’s (HWC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate of $1.08. Adjusted earnings per share, however, compared unfavorably with the $1.65 registered in the year-ago quarter.
HWC’s results were impacted by declines in NII and non-interest income. Further, a slight decrease in loan balances, and increases in expenses and provisions acted as spoilsports.
Synovus Financial Corp.’s (SNV - Free Report) fourth-quarter adjusted earnings per share of 80 cents lagged the Zacks Consensus Estimate of 94 cents. Also, adjusted earnings compared unfavorably with the $1.35 earned in the year-ago quarter.
Results were adversely impacted by declines in NII and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors. However, a modest increase in deposits provided some support to SNV’s quarterly performance.