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Fifth Third (FITB) Q1 Earnings Beat, Revenues Decline Y/Y

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Fifth Third Bancorp (FITB - Free Report) has reported first-quarter 2024 adjusted earnings per share (EPS) of 76 cents, surpassing the Zacks Consensus Estimate of 71 cents. In the prior-year quarter, the company reported an EPS of 78 cents.

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 $480 million, down 10% year over year.

Revenues Fall, Expenses Increase

Total revenues in the reported quarter were $2.1 billion, down 5% year over year. The top line surpassed the Zacks Consensus Estimate of $2.08.

Fifth Third’s NII (on an FTE basis) was $1.39 billion, down 9% year over year. Our estimate for NII was pegged at $1.39 billion.

The net interest margin (NIM) (on an FTE basis) shrunk year over year to 2.86% from 3.29%. Our estimate for NIM was pinned at 3.84%.

Non-interest income increased 2% year over year to $710 million. This was primarily led by a rise in service charges on deposits, card and processing revenues, and wealth and asset management revenues. Our estimate for the metric was pegged at $700.8 million.

Non-interest expenses increased 1% year over year to $1.34 billion. An increase in net occupancy expenses and marketing expenses resulted in this upsurge. Our estimate for the metric was pinned at $1.57 billion.

As of Mar 31, 2024, average loan and lease balances, and average total deposits were $117.3 billion and $168.1 billion, respectively. Average loans and deposits decreased 1% each on a sequential basis.

Credit Quality Deteriorates

The company reported a provision for credit losses of $94 million compared with $164 million in the year-ago quarter.

However, net charge-offs in the first quarter were $110 million or 0.38% of average loans and leases (on an annualized basis) compared with the $78 million or 0.26% witnessed in the prior-year quarter. The total allowance for credit losses increased to $2.47 billion from $2.44 billion. Moreover, the total non-performing assets were $748 million, up 20% from the year-ago quarter.

Capital Position Strong

The Tier 1 risk-based capital ratio was 11.75% compared with the 10.53% posted at the end of the prior-year quarter. The CET1 capital ratio was 10.44%, up from the 9.28% recorded at the end of the year-ago quarter. Also, the leverage ratio was 8.94% compared with the year-earlier quarter’s 8.67%.

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 in the past 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 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

State Street’s (STT - Free Report) first-quarter 2024 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.48. The bottom line increased 11.2% from the prior-year quarter.

STT’s results were primarily aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in the total assets under custody and AUM balances. However, lower NIR and higher expenses were major headwinds.

Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2024 adjusted earnings per share of $1.28 beat the Zacks Consensus Estimate of $1.18. However, the bottom line compared unfavorably with the $1.45 registered in the year-ago quarter.

HWC’s results were aided by an increase in the non-interest income. Also, marginally higher loan balances were tailwinds. However, a decline in NII, and higher expenses and provisions were the undermining factors.

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