Fifth Third Bancorp (FITB) Q2 2024 earnings summary

Executive summary

• Q2 2024 adjusted EPS was $0.86, with reported EPS of $0.81, reflecting strong profitability, disciplined expense management, and a resilient balance sheet despite economic uncertainty; results included a negative $0.05 EPS impact from Visa swap, legal settlements, and FDIC assessment.

• CET1 capital ratio increased to 10.60%, with $125 million in share repurchases executed during the quarter and robust capital and liquidity positions.

• Strategic investments in Southeast and middle market expansion, commercial payments, and wealth management drove market share and AUM growth.

• Recognized as best superregional bank in the U.S. by Euromoney and best private bank for high-net-worth clients for the third consecutive year.

Financial highlights

• Net interest income (NII) was $1.4B, up 1% sequentially but down 5% year-over-year; net interest margin (NIM) was 2.88%, up 2 bps sequentially and down 22 bps year-over-year.

• Adjusted return on tangible common equity was 15.1%, adjusted return on assets was 1.22% over the last 12 months, and return on average assets was 1.14% for Q2.

• Adjusted noninterest income decreased 4% year-over-year, with double-digit growth in commercial payments and wealth management fees.

• Adjusted noninterest expense was flat year-over-year and down 7% sequentially, reflecting expense discipline.

• Net charge-off ratio was 0.49%, up sequentially, driven by two previously reserved commercial credits; consumer charge-offs improved.

Outlook and guidance

• Full-year 2024 NII expected to decrease 2%-4%, with average total loans down 3% vs. 2023; Q4 average loans stable to up 1% year-over-year.

• Full-year adjusted noninterest income expected stable to down 1%; adjusted noninterest expense stable to 2023 levels.

• Efficiency ratio projected around 57% for 2024; net charge-off outlook remains 35-45 bps.

• Q3 NII expected up 2% sequentially; Q3 adjusted noninterest income up 1%-2%; Q3 net charge-offs in 40-45 bps range.

• Management expects modest NIM increases over the next several quarters, but notes headwinds from deposit margin compression and competition.