Earnings per share (EPS): $0.78, or $0.85 excluding certain items.
Return on Equity (ROE): 12.8%.
Adjusted efficiency ratio: improved to 56.1%.
Consumer household growth: 2.7% YoY, 6% growth in the Southeast.
Growth in retail deposits: approximately 16% year-on-year.
De Novo branch locations: 19 new branches will open in the fourth quarter.
Middle market loan production: highest in five quarters, up more than 30% year over year in the Southeast.
Commercial payments revenue growth: 10% year over year.
Wealth and Asset Management Revenue Growth: 12% YoY.
Assets under management (AUM): increased $12 billion to $69 billion, an increase of 21% year over year.
Common dividend increase: 6% to $0.37 per share.
Share buybacks: $200 million executed, $300 million planned for the fourth quarter.
CET1 ratio: increased to 10.8%.
Adjusted revenue growth: 3% sequentially.
Net revenue growth before provisions: Adjusted 5% sequentially.
Net Interest Income (NII): More than $1.4 billion, up 2% sequentially.
Net interest margin (NIM): 2 basis points improvement.
Adjusted non-interest income: +2% year over year.
Adjusted non-interest expense: +3% year over year, +2% sequentially.
Net charge-off rate: 48 basis points.
Allowance for credit losses (ACL) coverage ratio: 2.09%.
Release date: October 18, 2024
For a complete record of financial statements, see Complete Record of Financial Statements.
good points
Fifth Third Bancorp (NASDAQ:FITB) reported earnings per share of $0.78, or $0.85 excluding certain items, beating previous estimates.
The company achieved a return on equity of 12.8%, the highest among its peers ever reported.
Retail deposits grew approximately 16% year-over-year, with a significant increase in market share in the Southeast.
The Commercial Payments business experienced a 10% year-over-year increase in net fee-equivalent revenue and processed $4.3 trillion in transaction value.
Fifth Third Bancorp (NASDAQ:FITB) increased its common dividend by 6% to $0.37 per share and completed a $200 million share buyback.
Minus points
Net charge-offs were 48 basis points, slightly higher than expected but still a concern.
Commercial NPAs increased by $60 million, indicating some stress in the commercial portfolio.
Consumer portfolios showed some weakness, particularly in RV and dividend portfolios.
The company still faces headwinds from lower payments and revolver usage.
There are uncertainties in the economic outlook, including potential geopolitical risks and changes in interest rates.
story continues
Q&A highlights
Q: Can you explain the key factors impacting NII’s guidance for the fourth quarter, specifically the deposit data and how it has changed over time? A: CFO Brian Preston said that NII’s trajectory and deposits He explained that he was confident in his performance. They have been preparing for this cycle by seeing a natural shift away from brokered deposits and wholesale funding to lower costs. Since the 50 basis point rate cut, we have achieved a beta in the mid-40s, and expect further improvement as CDs mature and deposit costs fall.
Q: What do you think about generating record NII in 2025, and what type of lending rebound might be needed? A: CFO Brian Preston said he expects record NII said that no significant increase in lending would be necessary to achieve this goal. While the trajectory will depend on the economic environment, we expect tailwinds in consumer business and stabilization in commercial lending to support NII’s growth.
Q: How will the transition from an inverted to a positively sloping yield curve affect net interest income growth in 2025? A: CFO Brian Preston believes that if the yield curve becomes more normalized, , said it is beneficial because it reduces the cost of debt and maintains a fixed-rate asset spread. This environment will improve the economics from the duration of securities and swap portfolios and strengthen NII.
Q: Are you still reducing your exposure to the national shared credit book? And how is competition from non-bank lenders impacting your business? A: CEO Tim Spence is reaching a tipping point in de-risking the national shared credit book. said. Although they see competition from private credit primarily in leveraged lending, they remain disciplined in their lending practices and avoid high-risk structures such as payment-in-kind lending.
Q: How do you approach capital allocation, particularly share buybacks and retaining excess capital for growth or defense? A: CFO Brian Preston is confident in the company’s earnings trajectory. He explained that he believes that his company’s stock is a good investment. These generate large amounts of capital and allow flexibility in capital allocation. They aim to balance organic growth opportunities with shareholder returns given the high cost of holding excess capital.
For a complete record of financial statements, see Complete Record of Financial Statements.
This article first appeared on GuruFocus.
