Fifth Third Bancorp (NASDAQ:FITB) reported stronger-than-expected third-quarter results on Friday, supported by lower deposit costs that helped boost net interest income. However, the bank also flagged a loss tied to a loan extended to bankrupt auto dealer Tricolor, which weighed on sentiment around regional lenders.
The Ohio-based bank — along with many of its peers — has been working to bring down deposit costs as the Federal Reserve begins a new interest rate cutting cycle.
For the quarter ended in September, net interest income rose 7% year over year to $1.53 billion, slightly above the $1.52 billion expected by analysts. “This improvement was due to the benefits from proactive deposit and wholesale funding management decreasing interest-bearing liabilities costs by 61 basis points, improved earning asset mix, and the benefit of fixed-rate asset repricing,” Fifth Third said in a statement.
Adjusted non-interest income reached $789 million, topping forecasts as higher fee income bolstered the bank’s wealth and asset management divisions.
Net income available to common shareholders climbed 14% to $608 million, or $0.91 per diluted share, beating projections of $0.87.
The results come amid growing investor unease over the health of U.S. regional lenders following the high-profile collapses of U.S. auto parts supplier First Brands Group and dealership Tricolor Auto Group earlier this year.
Fifth Third reported a $178 million loss tied to the impairment of its $200 million asset-backed finance loan to Tricolor, according to Reuters. Net charge-offs — loans the bank does not expect to recover — totaled $339 million for the quarter.
Fifth Third Bancorp stock price
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