stockchart

Fifth Third Bancorp QI Earnings & Revenue Beat Market Estimates

stockchart

Improving credit and well-managed expenses afforded Fifth Third Bancorp executives the opportunity to beat Wall Street expectations in their first fiscal quarter of the year, with earnings per share topping analyst expectations by $0.49 and revenues topping the investment community calls by $360-million.

Cincinnati-based Fifth Third, which has multiple branches throughout Michigan’s Great Southwest, this morning reported first quarter 2018 net income of $704-million versus net income of $509-million in the fourth quarter of 2017 and $305-million in the first quarter of 2017. After preferred dividends, net income available to common shareholders was $689 million, or $0.97 per diluted share, in the first quarter of 2018, compared with $486 million, or $0.67 per diluted share, in the fourth quarter of 2017, and $290 million, or $0.38 per diluted share, in the first quarter of 2017. EPS were $0.49 higher than analyst estimates.

Fifth Third Chairman, President & CEO Greg Carmichael says, “Our first quarter results were strong and reflected the re-positioning of our balance sheet over the last 24 months to improve the resiliency of our earnings. Our balance sheet continues to strengthen as evidenced by improving credit quality, strong capital ratios and the level of asset sensitivity which positions us well in the current rate environment.”

Carmichael adds, “Expenses were well-managed while we continued to invest in our strategic initiatives. We remain focused on driving improved shareholder returns and achieving our long term profitability targets.”

ADVERTISEMENT
Your content continues below

Taxable equivalent Net Interest Income of $999-million in the first quarter of 2018 increased $36-million, or 4-percent, from the prior quarter. The prior quarter’s results were negatively impacted by a $27-million leveraged lease re-measurement. Excluding the impact of that re-measurement, taxable equivalent Net Interest Income in the first quarter of 2018 was up $9-million, or 1-percent, from the prior quarter, reflecting higher short-term market rates, partially offset by a lower day count. Taxable equivalent NIM of 3.18-percent in the first quarter of 2018 increased 16-bps from the prior quarter. Excluding the lease re-measurement, taxable equivalent NIM increased 8 bps from the prior quarter’s adjusted NIM, primarily driven by higher short-term market rates and a lower day count.

Compared to the first quarter of 2017, taxable equivalent NII increased $60-million, or 6-percent, from the first quarter of 2017. The first quarter of 2017 results were positively impacted by a $12-million reversal of a previously-estimated charge for refunds to certain bankcard customers. Excluding the card remediation impact, taxable equivalent NII in the first quarter of 2018 was up $72-million, or 8-percent, from the first quarter of 2017, reflecting higher short-term rates and an increase in investment portfolio balances. Taxable equivalent NIM increased 16 bps from the first quarter of 2017, primarily driven by higher short-term market rates, partially offset by the aforementioned card remediation impact. Excluding this impact, the taxable equivalent NIM increased 20 bps from the first quarter of 2017.

Average securities and other short-term investments were $34.7-billion in the first quarter of 2018 compared to $33.8-billion in the previous quarter and $33.2-billion in the first quarter of 2017. Average available-for-sale debt and other securities of $32.2-billion in the first quarter of 2018 were up $917-million, or 3-percent, sequentially and up $937-million, or 3-percent, from the first quarter of 2017.

Corporate banking revenue of $88-million was up 14-percent sequentially and up 19-percent year-over-year. The sequential and year-over-year increases were primarily driven by an increase in Mergers & Acquisitions advisory fees, as well as the aforementioned lease re-marketing impairments recognized both in the fourth quarter of 2017 and first quarter of 2017. Excluding the impact of the lease impairments, corporate banking revenue decreased 14-percent sequentially and decreased 16-percent year-over-year, primarily driven by lower loan syndication fees and business lending fees.

Mortgage banking net revenue was $56-million in the first quarter of 2018, up 4-percent from the fourth quarter of 2017 and up 8-percent from the first quarter of 2017. The sequential increase was driven by a lower negative impact from net valuation adjustments, partially offset by lower origination fees and gains on loan sales. The year-over-year increase was driven by higher gross mortgage servicing fees, partially offset by lower origination fees and gains on loan sales. Originations of $1.6 billion in the current quarter decreased 18-percent sequentially and decreased 19-percent from the first quarter of 2017.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*