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Fifth Third Q3 PPNR, net interest income exceed prior guidance

Oct. 22, 2020 7:49 AM ETFifth Third Bancorp (FITB) StockBy: Liz Kiesche, SA News Editor
  • Fifth Third Bancorp (NASDAQ:FITB) Q3 earnings beat the consensus estimate as credit losses come in lower than expected and pre-provision net revenue exceeded its prior guidance, led by strong fees and better-than-expected net interest income performance.
  • Q3 GAAP EPS of 78 cents increased from 23 cents in Q2 and 72 cents in Q3 2019; compares with consensus of 59 cents.
  • Excluding charges for valuation of Visa total return swap, severance expense, branch and non-branch real estate charges, rent impairment, COVID-19-related expenses and other items, diluted EPS would have been 85 cents.
  • For Q4, FITB sees net interest income and net interest margin on a fully taxable equivalent basis stable, assuming no accelerated PPP fee benefit; noninterest income up 7%-8% from Q3, noninterest expense flat to slightly up, and net charge-off ratio in the 40-50 basis point range; expects loans and leases to fall ~2% from Q3.
  • Q3 adjusted net interest of $1.16B fell 2% Q/Q and 5% Y/Y; adjusted net interest margin of 2.55% contracted from 2.71% in Q2 and 3.25% in Q3 2019.
  • Adjusted NII Q/Q decline was primarily attributable to a decline in commercial and industrial loans and the impact of lower market rates.
  • FITB recorded a $15M reversal of credit losses in Q3 vs. a $485 provision in Q2 and $134 provision in the year-ago quarter.
  • Q3 adjusted PPNR of $798M compares with $797M in Q2 2020 and $852M in Q3 2019.
  • Q3 total average portfolio loans and leases were $113.4B, down 4% Q/Q and up 3% Y/Y.
  • Q3 total average deposits of $155.9B, up 4% Q/Q and 25% Y/Y.
  • Q3 net charge-off ratio of 0.33% fell from 0.40% in Q2 and relatively stable to 0.32% in Q3 2019.
  • "Given the anticipated revenue headwinds, we are very focused on optimizing our expense base to maintain healthy levels of returns," said Chairman, President, and CEO Greg D. Carmichael. "To that end, we took proactive measures during the quarter to ensure Fifth Third continues to generate sustainable, long-term value for shareholders."
  • Conference call at 9:00 AM ET.
  • Previously: Fifth Third Bancorp EPS beats by $0.19, misses on revenue (Oct. 22)

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