• Earnings Per Share (EPS): $0.90 excluding certain items.
• Adjusted Return on Equity: 13.7%.
• Revenue Growth: 2% sequentially and year-over-year.
• Core Adjusted PPNR: Exceeded $1 billion.
• Adjusted Efficiency Ratio: Improved to 54.7%.
• Full Year Return on Assets: 1.17%.
• Return on Tangible Common Equity: 14% excluding AOCI.
• Efficiency Ratio: 57.1% for the full year.
• Capital Returned to Shareholders: $1.6 billion in 2024.
• Share Repurchases: $300 million in the fourth quarter.
• Loan Growth: 3% sequential end-of-period growth.
• Middle Market Loan Production: Increased over 50% sequentially and over 70% year-over-year.
• Assets Under Management (AUM): Grew 17% year-over-year to $69 billion.
• Net Interest Income (NII): Increased 1% sequentially to $1.4 billion.
• Net Interest Margin (NIM): Improved 7 basis points.
• Core Deposit Growth: Increased by $1.6 billion.
• Commercial Payments Fee Revenue: Grew 8% in 2024.
• Capital Markets Fee Revenue: Grew 16% over the prior year.
• Wealth Management Fees: Grew 11% over the prior year to $163 million.
• Net Charge-Off Ratio: 46 basis points.
• Allowance for Credit Losses (ACL) Coverage Ratio: 2.08%.
• CET1 Ratio: 10.5%.

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

Release Date: January 21, 2025

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 $0.90, exceeding prior guidance.
• The company achieved an adjusted return on equity of 13.7%, the highest among peers.
• Revenues grew 2% sequentially and year-over-year, with core adjusted pre-provision net revenue exceeding $1 billion.
• Fifth Third Bancorp resumed share repurchases and raised its dividend, returning $1.6 billion of capital to shareholders in 2024.
• Investments in expanding the Southeast branch footprint and the momentum banking platform drove significant growth in low-cost deposits.

Negative Points

• The net charge-off ratio was 46 basis points, reflecting a seasonal uptick in consumer charge-offs.
• The company experienced an increase in non-performing assets, with commercial NPAs contributing significantly.
• Provision expenses resulted in a $43 million build in the allowance for credit losses due to loan growth and macroeconomic scenario deterioration.
• There is uncertainty in the economic environment, which could impact future growth and profitability.
• The company faces challenges in the labor market, which could affect loan demand and business operations.

Q & A Highlights

Q: Can you provide more context on how you see loan demand developing through the year? A: We are optimistic about loan demand, particularly in the commercial sector. Our pipelines are robust, and we have seen broad-based growth across regions and verticals. On the consumer side, auto loans have been strong, and we expect continued growth in home equity. We are also seeing increased optimism among business owners, which should support loan growth.

Q: How would you characterize your rate sensitivity now versus where you'd like it to be? A: We are currently fairly neutral in terms of rate sensitivity. Our diversified loan origination platforms and liquidity provide us with flexibility to adjust our asset and liability sensitivity as needed, depending on the rate environment.

Q: Are you calling the turn for commercial loan growth for Fifth Third or the industry? A: We are cautiously optimistic about commercial loan growth for Fifth Third. The backdrop is more favorable than it has been, with potential rate cuts and regulatory clarity. However, we remain cautious due to the complexity and unpredictability of the economy.

Q: What is your outlook for deposit rates in 2025, assuming the Fed is finished cutting? A: We expect to continue reducing deposit costs slightly if the Fed is done cutting rates. We have flexibility with maturing CDs and our cash position to manage deposit costs effectively, depending on loan growth and competition.

Q: Can you provide color on the uptick in C&I nonaccruals this quarter? A: The increase in nonaccruals was driven by a few commercial loans with no discernible industry or geographic trends. We remain within a few basis points of our 10-year average for commercial nonaccruals, and we expect some of these loans to pay down or off in the first half of the year.

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