FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2018

Summary

Fifth Third Bancorp (FITB) reported a strong first quarter of 2018, driven by a significant increase in net income, up 131% year-over-year to $704 million. This robust performance was largely bolstered by a substantial gain of $414 million recognized from the dilution of its ownership interest in Vantiv Holding, LLC (now Worldpay, Inc.) following Vantiv's acquisition of Worldpay Group plc. Earnings per diluted share surged to $0.97 from $0.38 in the prior year's quarter. The bank also saw healthy growth in net interest income, which rose 6% to $999 million on a Fully Taxable Equivalent (FTE) basis. This improvement was attributed to higher yields on loans and securities, as well as the Federal Open Market Committee's interest rate hikes. Noninterest income also experienced a significant boost, increasing by 74% to $909 million, primarily due to the aforementioned Vantiv gain. Despite an increase in noninterest expenses, driven by personnel and technology investments, the Bancorp demonstrated improved efficiency with its efficiency ratio falling to 54.8% from 67.4% in the prior year. Credit quality remained stable, with net charge-offs as a percentage of average portfolio loans and leases declining by 10% to 0.36%. Capital ratios remained strong and well above regulatory requirements. The Bancorp also continued its capital return initiatives, declaring a dividend per common share of $0.16, an increase of 14% year-over-year, and engaging in accelerated share repurchase transactions.

Key Highlights

• 1Net income available to common shareholders increased by 138% to $689 million, or $0.97 per diluted share, compared to $290 million, or $0.38 per diluted share, in the prior year.
• 2Net interest income (FTE) increased by 6% to $999 million, driven by higher loan yields and increased average taxable securities, benefiting from Federal Reserve rate hikes.
• 3Noninterest income surged by 74% to $909 million, significantly boosted by a $414 million gain from the dilution of its investment in Vantiv Holding, LLC (Worldpay, Inc.).
• 4Provision for loan and lease losses decreased by 69% to $23 million, reflecting improved credit quality with net charge-offs down 10% to 0.36% of average loans and leases.
• 5The efficiency ratio improved significantly to 54.8% from 67.4% in the prior year, indicating better cost management.
• 6Total assets remained stable at $141.5 billion, with total Bancorp shareholders' equity slightly decreasing to $16.2 billion.
• 7Capital ratios remained strong, with CET1 capital at 10.82%, well above regulatory 'well-capitalized' guidelines.

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