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Fifth Third 4Q Profit Surprises as Credit Trends Improve

Fifth Third Bancorp Bank


Led by fewer costs related to bad loans and higher fees, Fifth Third Bancorp (FITB) revealed on Thursday stronger-than-expected fourth-quarter earnings.

Net charge-offs related to loans slumped to just $147 million from $239 million in the year-earlier period, marking the lowest level since the third quarter of 2007.

Total delinquencies, which include loans 30 to 89 days past due or longer, fell 4% to the lowest level since the second quarter of 2004.

“Credit trends continued to be favorable, with full year net charge-offs down 40% from 2011 and nonperforming assets declining 29% both the lowest levels reported since 2007,” said Fifth Third CEO Kevin Kabat.

The Cincinnati-based bank reported quarterly net income of $390 million, or 43 cents a share, compared with a year-earlier $305 million, or 33 cents a share.

The results topped average analyst estimates in a Thomson Reuters poll by two pennies.

The improvement was led by an increase in loans to nearly $5 billion by the end of the period as well as double-digit growth in commercial and industrial loans and residential mortgages due to higher demand and low interest rates. Average core deposits increased 5%.

“These quarterly results capped a solidly profitable year in which Fifth Third generated the second highest level of net income in our company’s history,” Kabat said.

Shares of Fifth Third ticked nearly 4% higher Thursday to $16.15 in recent trade.

Follow Jennifer Booton on Twitter at @Jbooton