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Fifth Third Q3 Earnings Beat on High Loan Demand, NII Declines Y/Y
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Fifth Third Bancorp (FITB - Free Report) has reported third-quarter 2024 adjusted earnings per share (EPS) of 85 cents, surpassing the Zacks Consensus Estimate of 82 cents. In the prior-year quarter, the company reported an EPS of 92 cents.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results benefited from a rise in loan balances, along with strong capital ratios. A decline in net interest income (NII), fee income and higher expenses were spoilsport.
The company has reported net income available to common shareholders (GAAP basis) of $532 million, down 14.6% year over year.
FITB’s Revenues Fall & Expenses Rise
Total revenues in the reported quarter were $2.14 billion, down 1% year over year. Also, the top line missed the Zacks Consensus Estimate of $2.16 billion.
Fifth Third’s NII (on an FTE basis) was $1.43 billion, down 1.2% year over year. Our estimate for NII was pegged at $1.44 billion.
The net interest margin (on an FTE basis) shrunk year over year to 2.9% from 2.98%. Our estimate for net interest margin was pinned at 2.97%.
Non-interest income declined marginally year over year to $711 million. This fall was primarily led by a decrease in revenues from the mortgage banking and leasing business, as well as a decline in other non-interest income. Our estimated figure matched the reported figure in the third quarter.
Non-interest expenses increased 4.7% year over year to $1.24 billion. The rise was primarily due to an increase in compensation and benefits, technology and communications and other non-interest expenses. Our estimate for the metric was pinned at $1.3 billion.
FITB’s Loan Rises, Deposits Stable
As of Sept. 30, 2024, average loans and leases were up marginally at $117.4 billion from the previous quarter. Average deposits remained stable at $167.2 billion sequentially.
FITB’s Credit Quality: Mixed Bag
The company reported a provision for credit losses of $160 million, up 34.5% from the year-ago quarter. Our estimate for the metric was pinned at $124.5 million.
Moreover, the total non-performing portfolio loans and leases were $725 million, up 18.5% year over year.
Net charge-offs in the second quarter increased to $142 million or 0.48% of average loans and leases (on an annualized basis) compared with the $124 million or 0.41% witnessed in the prior-year quarter. Our estimate for net charge-offs was pinned at $146.4 million.
However, the total allowance for credit losses decreased 3.2% to $2.44 billion year over year. Our estimate for net charge-offs was pinned at $2.3 billion.
FITB’s Capital Position Strong
The Tier 1 risk-based capital ratio was 12.07% compared with the 11.06% posted at the end of the prior-year quarter. The CET1 capital ratio was 10.75%, up from the 9.8% recorded at the end of the year-ago quarter. Also, the leverage ratio was 9.11% compared with the year-earlier quarter’s 8.85%.
FITB’s Capital Distribution Activities
In the reported quarter, FITB repurchased $200 million of its common outstanding shares.
The company increased its quarterly cash dividend on its common shares by 6% to 37 cents per share for the third quarter of 2024.
Our Viewpoint on FITB
The company’s solid capital position will aid capital distribution activities in the upcoming period. The recent hike in quarterly dividend will further boost investors’ confidence in the stock. However, lower NII and fee income will put pressure on the top-line growth.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Hancock Whitney Corp.’s (HWC - Free Report) third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 per share registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent.
Synovus Financial Corp. (SNV - Free Report) reported third-quarter 2024 adjusted earnings per share of $1.23, which surpassed the Zacks Consensus Estimate of $1.09 per share. This compares to earnings of 84 cents a year ago.
SNV’s results benefited from strong growth in non-interest revenues, a fall in expenses and provisions for credit losses. Also, improving loans and deposit balances were tailwinds. However, a decline in NII and a rise in non-performing loans were major headwinds.
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Fifth Third Q3 Earnings Beat on High Loan Demand, NII Declines Y/Y
Fifth Third Bancorp (FITB - Free Report) has reported third-quarter 2024 adjusted earnings per share (EPS) of 85 cents, surpassing the Zacks Consensus Estimate of 82 cents. In the prior-year quarter, the company reported an EPS of 92 cents.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results benefited from a rise in loan balances, along with strong capital ratios. A decline in net interest income (NII), fee income and higher expenses were spoilsport.
The company has reported net income available to common shareholders (GAAP basis) of $532 million, down 14.6% year over year.
FITB’s Revenues Fall & Expenses Rise
Total revenues in the reported quarter were $2.14 billion, down 1% year over year. Also, the top line missed the Zacks Consensus Estimate of $2.16 billion.
Fifth Third’s NII (on an FTE basis) was $1.43 billion, down 1.2% year over year. Our estimate for NII was pegged at $1.44 billion.
The net interest margin (on an FTE basis) shrunk year over year to 2.9% from 2.98%. Our estimate for net interest margin was pinned at 2.97%.
Non-interest income declined marginally year over year to $711 million. This fall was primarily led by a decrease in revenues from the mortgage banking and leasing business, as well as a decline in other non-interest income. Our estimated figure matched the reported figure in the third quarter.
Non-interest expenses increased 4.7% year over year to $1.24 billion. The rise was primarily due to an increase in compensation and benefits, technology and communications and other non-interest expenses. Our estimate for the metric was pinned at $1.3 billion.
FITB’s Loan Rises, Deposits Stable
As of Sept. 30, 2024, average loans and leases were up marginally at $117.4 billion from the previous quarter. Average deposits remained stable at $167.2 billion sequentially.
FITB’s Credit Quality: Mixed Bag
The company reported a provision for credit losses of $160 million, up 34.5% from the year-ago quarter. Our estimate for the metric was pinned at $124.5 million.
Moreover, the total non-performing portfolio loans and leases were $725 million, up 18.5% year over year.
Net charge-offs in the second quarter increased to $142 million or 0.48% of average loans and leases (on an annualized basis) compared with the $124 million or 0.41% witnessed in the prior-year quarter. Our estimate for net charge-offs was pinned at $146.4 million.
However, the total allowance for credit losses decreased 3.2% to $2.44 billion year over year. Our estimate for net charge-offs was pinned at $2.3 billion.
FITB’s Capital Position Strong
The Tier 1 risk-based capital ratio was 12.07% compared with the 11.06% posted at the end of the prior-year quarter. The CET1 capital ratio was 10.75%, up from the 9.8% recorded at the end of the year-ago quarter. Also, the leverage ratio was 9.11% compared with the year-earlier quarter’s 8.85%.
FITB’s Capital Distribution Activities
In the reported quarter, FITB repurchased $200 million of its common outstanding shares.
The company increased its quarterly cash dividend on its common shares by 6% to 37 cents per share for the third quarter of 2024.
Our Viewpoint on FITB
The company’s solid capital position will aid capital distribution activities in the upcoming period. The recent hike in quarterly dividend will further boost investors’ confidence in the stock. However, lower NII and fee income will put pressure on the top-line growth.
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) third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 per share registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent.
Synovus Financial Corp. (SNV - Free Report) reported third-quarter 2024 adjusted earnings per share of $1.23, which surpassed the Zacks Consensus Estimate of $1.09 per share. This compares to earnings of 84 cents a year ago.
SNV’s results benefited from strong growth in non-interest revenues, a fall in expenses and provisions for credit losses. Also, improving loans and deposit balances were tailwinds. However, a decline in NII and a rise in non-performing loans were major headwinds.