By Lisa Beilfuss
Fifth Third Bancorp said profit dropped in its latest quarter as
revenue declined and the company recorded impairment charges
associated with branch closures.
Results fell short of Wall Street expectations.
The Cincinnati-based bank reported earnings of $315 million,
down from $439 million a year earlier. On a per-share basis, profit
fell to 36 from 49 cents. Revenue slid 12% to $1.45 billion.
Analysts anticipated 38 cents in per-share profit on $1.5
billion in revenue, according to Thomson Reuters.
Fifth Third managed to lift its net interest margin, a key gauge
of lending profitability, to 2.90% from 2.86% in the first quarter
on growth in the company's commercial business. The metric, which
measures how much a bank earns from the difference between what it
pays on deposits and what it receives on loans and investments, has
been squeezed at many banks dealing with still-low interest rates.
Some regional lenders, like Fifth Third, have recently reported
sequential improvements signaling the gauge may have bottomed.
Versus a year ago, NIM fell from 3.15%.
To help offset declines in interest income, regional lenders
have stepped up efforts to grow fee-based businesses. But for Fifth
Third, noninterest income decreased 24% to $556 million in the
latest quarter, dragged by impairment charges stemming from changes
in its branch network and airplane leases. Like other lenders
striving to cut expenses to boost profit, Fifth Third said last
month it would consolidate or sell about 100 branches in an effort
save about $60 million a year.
Excluding those items, the company said, noninterest income rose
4% from last year's quarter. The highlight was mortgage banking,
which jumped 50% to $117 million. Card and processing revenue rose
1% from the year ago quarter and 8% from the first quarter.
Overall, noninterest expense dipped 1% to $947 million. Still,
the lender's efficiency ratio, which measures how much it costs a
bank to produce revenue and where lower is better, rose to 65.4%
from 58.2% last year. Incoming Chief Executive Greg Carmichael said
Tuesday that he sees "further opportunities to improve operational
efficiencies."
Average portfolio loans rose 1.8% to $92.2 billion.
Shares in the company, up about 4% this year, were inactive
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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