• 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 Households Growth: 2.7% year-over-year, with 6% growth in the Southeast.
• Retail Deposits Growth: Nearly 16% year-over-year.
• De Novo Branch Locations: 19 new branches to open in the fourth quarter.
• Middle Market Loan Production: Highest in five quarters, with over 30% growth year-over-year in the Southeast.
• Commercial Payments Revenue Growth: 10% year-over-year.
• Wealth and Asset Management Revenue Growth: 12% year-over-year.
• Assets Under Management (AUM): Increased by $12 billion to $69 billion, up 21% year-over-year.
• Common Dividend Increase: 6% to $0.37 per share.
• Share Repurchases: $200 million executed, with plans for $300 million in the fourth quarter.
• CET1 Ratio: Increased to 10.8%.
• Adjusted Revenue Growth: 3% sequentially.
• Pre-Provision Net Revenue Growth: 5% sequentially on an adjusted basis.
• Net Interest Income (NII): Over $1.4 billion, increased 2% sequentially.
• Net Interest Margin (NIM): Improved by 2 basis points.
• Adjusted Non-Interest Income: Increased 2% year-over-year.
• Adjusted Non-Interest Expense: Up 3% year-over-year, 2% sequentially.
• Net Charge-Off Ratio: 48 basis points.
• Allowance for Credit Losses (ACL) Coverage Ratio: 2.09%.

• Warning! GuruFocus has detected 8 Warning Sign with FITB.

Release Date: October 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fifth Third Bancorp (NASDAQ:FITB) reported earnings per share of $0.78, or $0.85 excluding certain items, exceeding previous guidance.
• The company achieved a return on equity of 12.8%, the best among peers who have reported thus far.
• Retail deposits grew nearly 16% year-over-year, with significant market share gains in the Southeast.
• The commercial payments business grew net fee equivalent revenues by 10% year-over-year, processing $4.3 trillion in dollar volume.
• Fifth Third Bancorp (NASDAQ:FITB) increased its common dividend by 6% to $0.37 per share and executed $200 million in share repurchases.

Negative Points

• Net charge-offs were 48 basis points, slightly better than expectations but still a concern.
• Commercial NPAs increased by $60 million, indicating some stress in the commercial portfolio.
• The consumer portfolio showed some softness, particularly in the RV and dividend portfolios.
• The company is still facing some headwinds from paydowns and revolver utilization declines.
• There is uncertainty regarding the economic outlook, including potential geopolitical risks and interest rate volatility.

Q & A Highlights

Q: Can you discuss the main factors affecting the fourth quarter NII guidance, particularly regarding deposit data and its evolution over time? A: Bryan Preston, CFO, explained that they feel confident about the NII trajectory and deposit performance. They have prepared for this cycle, seeing a natural transition from broker deposits and wholesale funding to lower costs. They have achieved a mid-40s beta since the 50 basis point rate cut and expect further improvements as CDs mature and deposit costs decrease.

Q: What are your thoughts on generating record NII in 2025, and what kind of lending rebound might be required? A: Bryan Preston, CFO, noted that they don't need significant loan growth to achieve record NII. The trajectory will depend on the economic environment, but they expect tailwinds in consumer businesses and stabilization in commercial lending, which should support NII growth.

Q: How would a shift from an inverted to a positively sloping yield curve impact your net interest income growth for 2025? A: Bryan Preston, CFO, stated that a more normalized yield curve would be beneficial, providing relief on liability costs and maintaining fixed-rate asset spreads. This environment would allow for better economics from duration in the securities and swap portfolios, enhancing NII.

Q: Are you still reducing exposure to the shared national credit book, and how is competition from non-bank lenders affecting your business? A: Tim Spence, CEO, mentioned they are reaching an inflection point in de-risking the shared national credit book. They see competition from private credit mainly in leveraged lending, but remain disciplined in their lending practices, avoiding high-risk structures like payment-in-kind loans.

Q: How do you approach capital allocation, especially regarding buybacks versus holding excess capital for growth or defensibility? A: Bryan Preston, CFO, explained that they feel confident in their earnings trajectory and view their stock as a good investment. They generate significant capital, allowing flexibility in capital allocation. They aim to balance organic growth opportunities with shareholder returns, considering the high cost of holding excess capital.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.