10-QPeriod: Q1 FY2022

FIFTH THIRD BANCORP Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 9, 2022For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) reported its first quarter 2022 results, showcasing a mixed financial performance. Net income available to common shareholders decreased significantly by 30% year-over-year to $474 million, translating to diluted earnings per share of $0.68, down from $0.93 in the prior year's quarter. This decline was primarily driven by a substantial increase in the provision for credit losses, which swung from a benefit of $173 million in Q1 2021 to an expense of $45 million in Q1 2022. This increase reflects higher loan balances and a less favorable economic outlook, despite improvements in commercial credit quality. Despite the drop in net income, net interest income on a FTE basis saw a modest increase of 2% to $1.2 billion, supported by higher average interest-earning assets and a reduction in long-term debt. However, net interest margin compressed slightly to 2.59% from 2.62% due to lower yields on certain loan portfolios. Noninterest income declined by 9% primarily due to lower mortgage banking net revenue and leasing business revenue, although wealth and asset management and service charges on deposits showed growth. The Bancorp maintained strong capital ratios, with its CET1 capital ratio at 9.31%, exceeding regulatory requirements.

Financial Highlights

40 data points
Beta

Revenue

$152.00M

Net Income

$494.00M

325.0% Net Margin

EPS (Diluted)

$0.68

Total Assets

$211.46B

Cash & Equivalents

$3.05B

Free Cash Flow

$1.62B

Financial Statements
Beta
Revenue$152.00M
Interest Expense$94.00M
Net Income$494.00M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)687.54M
Shares Outstanding (Diluted)696.24M

Key Highlights

  • 1Net income available to common shareholders declined 30% year-over-year to $474 million ($0.68/diluted share), impacted by a higher provision for credit losses.
  • 2Net interest income (FTE) increased 2% to $1.2 billion, driven by higher average interest-earning assets, but net interest margin slightly decreased to 2.59%.
  • 3Provision for credit losses increased significantly to $45 million from a benefit of $173 million in the prior year's quarter.
  • 4Noninterest income decreased 9% to $684 million, primarily due to lower mortgage banking net revenue and leasing business revenue.
  • 5Total assets stood at $211.5 billion, with total loans and leases increasing by $2.0 billion to $118.5 billion, driven by commercial loan growth.
  • 6Core deposits increased 1% to $170.4 billion, reflecting growth in savings and demand deposits.
  • 7CET1 capital ratio remained strong at 9.31%, exceeding regulatory requirements.

Frequently Asked Questions

The primary driver for the 30% year-over-year decrease in net income available to common shareholders was a substantial increase in the provision for credit losses. This provision rose to $45 million in Q1 2022 from a benefit of $173 million in Q1 2021. This shift reflects an increase in the Allowance for Credit Losses, influenced by higher end-of-period loan balances and a less favorable economic outlook, despite some improvements in commercial credit quality.

Net interest income on a Fully Taxable Equivalent (FTE) basis increased by 2% to $1.2 billion, primarily due to an increase in average interest-earning assets and a reduction in long-term debt. However, the net interest margin slightly decreased to 2.59% from 2.62% in the prior year's quarter. This compression was mainly due to lower yields on average commercial and industrial loans, indirect secured consumer loans, and residential mortgage loans, partially offset by an increase in the rate earned on excess reserves.

Total noninterest income decreased by 9% to $684 million. This decline was mainly attributed to a significant 39% decrease in mortgage banking net revenue and a 29% drop in leasing business revenue. However, these decreases were partially offset by increases in service charges on deposits (up 6%) and wealth and asset management revenue (up 4%).

Fifth Third Bancorp maintained a strong capital position. As of March 31, 2022, its Common Equity Tier 1 (CET1) capital ratio was 9.31%, Tier 1 risk-based capital ratio was 10.63%, and Total risk-based capital ratio was 12.93%. These ratios comfortably exceed the minimum regulatory requirements and the Bancorp's stress capital buffer requirement.