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Fee Income to Support Fifth Third's (FITB) Earnings in Q2
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Fifth Third Bancorp (FITB - Free Report) is scheduled to report second-quarter results on Jul 19 before the opening bell. Quarterly revenues and earnings are likely to have declined in the to-be-reported quarter on a year-over-year basis.
In the last reported quarter, the bank’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in non-interest income and deposit balance. However, a fall in net interest income (NII) limited its revenue growth. Higher expenses were another undermining factor.
This Cincinnati, OH-based lender has an impressive earnings surprise history. Its earnings beat estimates in all of the trailing four quarters, the surprise being 8.52%, on average.
The Zacks Consensus Estimate for FITB’s second-quarter earnings of 84 cents per share has remained unchanged in the past seven days. The figure indicates a fall of 3.5% from the year-ago number.
The consensus estimate for revenues is pegged at $2.11 billion, suggesting a decline of 3.2% from the year-ago figure. Management expects adjusted total revenues to be stable on a sequential basis.
Here are some factors that are expected to have impacted FITB’s quarterly performance.
Loans and NII: Per the Fed’s latest data, demand for commercial and industrial loans improved from first-quarter 2024 end, while consumer loan demand weakened. The company’s average interest-earning assets in the second quarter of 2024 are likely to have witnessed some improvement.
The Zacks Consensus Estimate for average interest-earning assets of $195.85 billion for the quarter indicates a marginal rise from the prior quarter’s tally. Our estimate suggests the metric to be $195.82 billion.
FITB expects total average loans and leases (including held-for-sale loans) to be stable for the quarter under review. We estimate the metric to be $117.9 billion, hinting at a marginal rise from the prior quarter's reported figure.
As the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the quarter, the company is less likely to have recorded a solid improvement in NII. Also, the inverted yield curve in the June-ended quarter and high funding costs are expected to have put pressure on the metric.
The company expects adjusted NII to be stable to up 1% sequentially. Also, the consensus mark for NII of $1.39 billion indicates a 1% rise sequentially. Our estimate matches the consensus mark.
Non-Interest Revenues: The stabilizing deposit balance is likely to have positively impacted FITB’s service charges on deposits. The consensus estimate for the metric of $152 million suggests a marginal increase sequentially. Our estimate is pegged at $148.7 million.
Mergers and acquisitions (M&As) bounced back in the second quarter of 2024 after muted performances in the past couple of years. Both deal value and volume witnessed a remarkable comeback driven by solid financial performance, fading recession risks, buoyant markets, and expected rate cuts this year. With an increase in M&A volumes, advisory revenues are expected to have improved, positively impacting commercial banking revenues.
The Zacks Consensus Estimate for commercial banking revenues is pegged at $142 million, representing a marginal sequential decline from the prior quarter’s figure. We project the metric to be $152.6 million.
In the second quarter, mortgage rates dropped marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained lower than in the prior quarter due to home price appreciation.
Yet, supported by lower mortgage rates, there is the likelihood of a modest rise in refinancing activities. Also, with the borrowers accepting the fact that interest rates will remain high for a longer period, it is likely to have provided support to FITB’s mortgage banking income and income. The Zacks Consensus Estimate is pegged at $61 million, suggesting an increase of 12.9% from the prior quarter’s reported figure. We estimate the metric to be $59.4 million.
Wealth and asset management revenues are likely to have gained from higher equity market performance in the quarter. The Zacks Consensus Estimate for wealth and asset management revenues is pegged at $161 million, remaining flat from the prior quarter’s tally. Our estimate is pinned at $150.3 million.
The Zacks Consensus Estimate for card and processing revenues is pegged at $105.6 million, indicating a rise of 3.6% from the prior quarter’s reported figure. Our estimate is pinned at $105.3 million.
Management expects non-interest income to be stable on a sequential basis in the quarter to be reported. The Zacks Consensus Estimate for non-interest income is pegged at $720 million, which indicates a 1.5% rise from the prior quarter. Our model estimates the metric to be $729.3 million.
Expenses: Owing to strategic investments aimed at operational efficiencies in technology and marketing, higher compensation and benefits expenses and initiatives such as branch digitization and marketing expenses, the company’s expense base is anticipated to have escalated. As compared with the prior-quarter expenses are likely to have reduced due to lower seasonal expenses.
On a sequential basis, management expects adjusted non-interest expenses to decline by nearly 7-8%. We estimate total expenses to decline by 2.3% on a sequential basis to $1.31 billion.
What the Zacks Model Reveals
According to our quantitative model, the chances of First Third beating the Zacks Consensus Estimate this time are high. This is because it does have the right combination of two key ingredients, a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Fifth Third is +0.56%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Stocks That Warrant a Look
Here are few other finance stocks that you may want to consider, as our model shows that have the right combination of elements to post an earnings beat this time around.
In the past 60 days, the Zacks Consensus Estimate for NTRS’ quarterly earnings has moved upward by 1.2%
M&T Bank Corporation (MTB - Free Report) has an Earnings ESP of +0.22% and carries a Zacks Rank #3 at present. It is scheduled to release second-quarter 2014 earnings on Jul 18.
MTB’s quarterly earnings estimates have moved marginally downward in the past seven days.
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Fee Income to Support Fifth Third's (FITB) Earnings in Q2
Fifth Third Bancorp (FITB - Free Report) is scheduled to report second-quarter results on Jul 19 before the opening bell. Quarterly revenues and earnings are likely to have declined in the to-be-reported quarter on a year-over-year basis.
In the last reported quarter, the bank’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in non-interest income and deposit balance. However, a fall in net interest income (NII) limited its revenue growth. Higher expenses were another undermining factor.
This Cincinnati, OH-based lender has an impressive earnings surprise history. Its earnings beat estimates in all of the trailing four quarters, the surprise being 8.52%, on average.
Fifth Third Bancorp Price and EPS Surprise
Fifth Third Bancorp price-eps-surprise | Fifth Third Bancorp Quote
The Zacks Consensus Estimate for FITB’s second-quarter earnings of 84 cents per share has remained unchanged in the past seven days. The figure indicates a fall of 3.5% from the year-ago number.
The consensus estimate for revenues is pegged at $2.11 billion, suggesting a decline of 3.2% from the year-ago figure. Management expects adjusted total revenues to be stable on a sequential basis.
Here are some factors that are expected to have impacted FITB’s quarterly performance.
Loans and NII: Per the Fed’s latest data, demand for commercial and industrial loans improved from first-quarter 2024 end, while consumer loan demand weakened. The company’s average interest-earning assets in the second quarter of 2024 are likely to have witnessed some improvement.
The Zacks Consensus Estimate for average interest-earning assets of $195.85 billion for the quarter indicates a marginal rise from the prior quarter’s tally. Our estimate suggests the metric to be $195.82 billion.
FITB expects total average loans and leases (including held-for-sale loans) to be stable for the quarter under review. We estimate the metric to be $117.9 billion, hinting at a marginal rise from the prior quarter's reported figure.
As the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the quarter, the company is less likely to have recorded a solid improvement in NII. Also, the inverted yield curve in the June-ended quarter and high funding costs are expected to have put pressure on the metric.
The company expects adjusted NII to be stable to up 1% sequentially. Also, the consensus mark for NII of $1.39 billion indicates a 1% rise sequentially. Our estimate matches the consensus mark.
Non-Interest Revenues: The stabilizing deposit balance is likely to have positively impacted FITB’s service charges on deposits. The consensus estimate for the metric of $152 million suggests a marginal increase sequentially. Our estimate is pegged at $148.7 million.
Mergers and acquisitions (M&As) bounced back in the second quarter of 2024 after muted performances in the past couple of years. Both deal value and volume witnessed a remarkable comeback driven by solid financial performance, fading recession risks, buoyant markets, and expected rate cuts this year. With an increase in M&A volumes, advisory revenues are expected to have improved, positively impacting commercial banking revenues.
The Zacks Consensus Estimate for commercial banking revenues is pegged at $142 million, representing a marginal sequential decline from the prior quarter’s figure. We project the metric to be $152.6 million.
In the second quarter, mortgage rates dropped marginally, with the rate on a 30-year fixed mortgage declining to 6.7% in June from 6.8% at the start of April. This is likely to have resulted in a slight rise in mortgage demand. Yet, origination volumes (particularly purchase originations) remained lower than in the prior quarter due to home price appreciation.
Yet, supported by lower mortgage rates, there is the likelihood of a modest rise in refinancing activities. Also, with the borrowers accepting the fact that interest rates will remain high for a longer period, it is likely to have provided support to FITB’s mortgage banking income and income. The Zacks Consensus Estimate is pegged at $61 million, suggesting an increase of 12.9% from the prior quarter’s reported figure. We estimate the metric to be $59.4 million.
Wealth and asset management revenues are likely to have gained from higher equity market performance in the quarter. The Zacks Consensus Estimate for wealth and asset management revenues is pegged at $161 million, remaining flat from the prior quarter’s tally. Our estimate is pinned at $150.3 million.
The Zacks Consensus Estimate for card and processing revenues is pegged at $105.6 million, indicating a rise of 3.6% from the prior quarter’s reported figure. Our estimate is pinned at $105.3 million.
Management expects non-interest income to be stable on a sequential basis in the quarter to be reported. The Zacks Consensus Estimate for non-interest income is pegged at $720 million, which indicates a 1.5% rise from the prior quarter. Our model estimates the metric to be $729.3 million.
Expenses: Owing to strategic investments aimed at operational efficiencies in technology and marketing, higher compensation and benefits expenses and initiatives such as branch digitization and marketing expenses, the company’s expense base is anticipated to have escalated. As compared with the prior-quarter expenses are likely to have reduced due to lower seasonal expenses.
On a sequential basis, management expects adjusted non-interest expenses to decline by nearly 7-8%. We estimate total expenses to decline by 2.3% on a sequential basis to $1.31 billion.
What the Zacks Model Reveals
According to our quantitative model, the chances of First Third beating the Zacks Consensus Estimate this time are high. This is because it does have the right combination of two key ingredients, a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Fifth Third is +0.56%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Stocks That Warrant a Look
Here are few other finance stocks that you may want to consider, as our model shows that have the right combination of elements to post an earnings beat this time around.
Northern Trust Corporation (NTRS - Free Report) has an Earnings ESP of +1.56% and carriesa Zacks Rank #2 at present. The company is slated to report second-quarter 2024 results on Jul 17. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for NTRS’ quarterly earnings has moved upward by 1.2%
M&T Bank Corporation (MTB - Free Report) has an Earnings ESP of +0.22% and carries a Zacks Rank #3 at present. It is scheduled to release second-quarter 2014 earnings on Jul 18.
MTB’s quarterly earnings estimates have moved marginally downward in the past seven days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.