April 17 (Reuters) - Fifth Third Bancorp FITB.O reaffirmed the forecast for its annual net interest income growth on Thursday, as the lender banked on its ability to manage risks from the economic fallout of U.S. and China's escalating tariff war.

Regional banks like Fifth Third rely primarily on lending to small businesses and consumers, which are especially susceptible to any economic downturn. They also lack the scale and sizeable trading operations that typically shield larger peers during times of volatility.

But Fifth Third still expected its net interest income (NII) — the difference between what banks pay customers on deposits and earn as interest on loans — to grow between 5% and 6% this year.

"We remain proactive in managing our credit risk and stress testing our portfolio under many scenarios," CEO Tim Spence said.

The bank's NII rose 4% to $1.44 billion for the quarter ended March, driven by loan growth and lower deposit costs, in addition to fixed-rate asset repricing.

Average loans rose 3% in the quarter from a year earlier, driven by growth in commercial and consumer lending.

Fifth Third's net income available to common shareholders was $478 million, or 71 cents per share, in the quarter. It had earned $480 million, or 70 cents per share, a year earlier.

The Cincinnati, Ohio-based bank set aside $174 million as provision for credit losses, higher than $94 million a year earlier, amid mounting recession fears.

Shares of Fifth Third have fallen 19% in 2025, as of last close, lagging the 15% drop in the KBW Regional Banking Index .KRX.

(Reporting by Ateev Bhandari and Arasu Kannagi Basil in Bengaluru; Editing by Leroy Leo)

((Ateev.Bhandari@thomsonreuters.com;))