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Fifth Third Bancorp (FITB) Q2 Earnings Miss Estimates, NII Up
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Fifth Third Bancorp (FITB - Free Report) has reported second-quarter 2022 earnings per share (excluding after-tax impacts of certain items) of 79 cents, missing the Zacks Consensus Estimate of 87 cents. In the prior-year quarter, the company reported earnings per share of 94 cents.
The results were supported by high net interest income (NII), lower expenses, improved average loans and lease balances, and a decline in non-performing assets. However, a significant fall in fee income was an undermining factor.
The company reported net income available to common shareholders of $526 million compared with $674 million witnessed in the prior-year quarter.
Revenues Up on Higher NII, Expenses & Deposits Decline
Total revenues (on a fully taxable-equivalent or FTE basis) in the reported quarter were $2.02 billion, up 3% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $2.05 billion.
Fifth Third’s NII (on an FTE basis) was $1.34 billion, up 11% year over year. It primarily reflects the benefits of higher market rates, growth in investment portfolio balances, partially offset by lower Paycheck Protection Program (PPP)-related income and a decline in interest income from government mortgage buyouts.
Net interest margin (NIM) (on an FTE basis) rose 29 basis points (bps) year over year to 2.92%.
Non-interest income fell 9% year over year to $676 million. This was primarily due to a decline in commercial banking revenues, mortgage banking net revenues, wealth and asset management revenues and leasing business revenues.
Non-interest expenses decreased 4% from the prior-year quarter to $1.11 billion. The main reasons for the decrease in non-interest expenses were lower compensation and benefits, net occupancy expenses and leasing business expenses.
As of Jun 30, 2022, average loan and lease balances and average total deposits were at $117.69 billion and $162.89 billion, respectively. Loans increased 4%, whereas deposits decreased 3% on a sequential basis.
Credit Quality Mixed
The company reported a provision for credit losses of $179 million against the benefits of $115 million in the year-ago quarter. Net charge-offs in the second quarter were $62 million or 0.21% of average loans and leases (on an annualized basis) compared with the $44 million or 0.16% witnessed in the prior-year quarter.
Nonetheless, total non-performing assets were $559 million, down 20% from the year-ago quarter. The total allowance for credit losses marginally decreased to $2.20 billion.
Capital Position Weak
Tier 1 risk-based capital ratio was 10.24% compared with the 11.83% posted at the end of the prior-year quarter. The CET1 capital ratio was 8.96%, down from 10.37% recorded at the end of the year-ago quarter. The leverage ratio was 8.30% compared with the year-earlier quarter’s 8.55%.
Our Viewpoint
The rise in revenues of the company was backed by increased NII. The improvement in NIM was an impressive factor. However, a decrease in total deposits and a weak capital position were matters of concern.
Fifth Third Bancorp Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) second-quarter 2022 income from continuing operations per share of $2.30 handily outpaced the Zacks Consensus Estimate of $1.67. However, the reported figure declined 19% from the prior-year quarter.
Citigroup witnessed growth in NII and non-interest revenues. However, declines in investment banking revenues, loans and deposits were spoilsports.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.
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Fifth Third Bancorp (FITB) Q2 Earnings Miss Estimates, NII Up
Fifth Third Bancorp (FITB - Free Report) has reported second-quarter 2022 earnings per share (excluding after-tax impacts of certain items) of 79 cents, missing the Zacks Consensus Estimate of 87 cents. In the prior-year quarter, the company reported earnings per share of 94 cents.
The results were supported by high net interest income (NII), lower expenses, improved average loans and lease balances, and a decline in non-performing assets. However, a significant fall in fee income was an undermining factor.
The company reported net income available to common shareholders of $526 million compared with $674 million witnessed in the prior-year quarter.
Revenues Up on Higher NII, Expenses & Deposits Decline
Total revenues (on a fully taxable-equivalent or FTE basis) in the reported quarter were $2.02 billion, up 3% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $2.05 billion.
Fifth Third’s NII (on an FTE basis) was $1.34 billion, up 11% year over year. It primarily reflects the benefits of higher market rates, growth in investment portfolio balances, partially offset by lower Paycheck Protection Program (PPP)-related income and a decline in interest income from government mortgage buyouts.
Net interest margin (NIM) (on an FTE basis) rose 29 basis points (bps) year over year to 2.92%.
Non-interest income fell 9% year over year to $676 million. This was primarily due to a decline in commercial banking revenues, mortgage banking net revenues, wealth and asset management revenues and leasing business revenues.
Non-interest expenses decreased 4% from the prior-year quarter to $1.11 billion. The main reasons for the decrease in non-interest expenses were lower compensation and benefits, net occupancy expenses and leasing business expenses.
As of Jun 30, 2022, average loan and lease balances and average total deposits were at $117.69 billion and $162.89 billion, respectively. Loans increased 4%, whereas deposits decreased 3% on a sequential basis.
Credit Quality Mixed
The company reported a provision for credit losses of $179 million against the benefits of $115 million in the year-ago quarter. Net charge-offs in the second quarter were $62 million or 0.21% of average loans and leases (on an annualized basis) compared with the $44 million or 0.16% witnessed in the prior-year quarter.
Nonetheless, total non-performing assets were $559 million, down 20% from the year-ago quarter. The total allowance for credit losses marginally decreased to $2.20 billion.
Capital Position Weak
Tier 1 risk-based capital ratio was 10.24% compared with the 11.83% posted at the end of the prior-year quarter. The CET1 capital ratio was 8.96%, down from 10.37% recorded at the end of the year-ago quarter. The leverage ratio was 8.30% compared with the year-earlier quarter’s 8.55%.
Our Viewpoint
The rise in revenues of the company was backed by increased NII. The improvement in NIM was an impressive factor. However, a decrease in total deposits and a weak capital position were matters of concern.
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
Citigroup Inc.’s (C - Free Report) second-quarter 2022 income from continuing operations per share of $2.30 handily outpaced the Zacks Consensus Estimate of $1.67. However, the reported figure declined 19% from the prior-year quarter.
Citigroup witnessed growth in NII and non-interest revenues. However, declines in investment banking revenues, loans and deposits were spoilsports.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.