FIFTH THIRD BANCORP (FITB) Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered stable growth with diluted EPS of $0.88 and adjusted EPS of $0.90; net interest income (NII) rose 4% sequentially and 8% year-over-year as NIM expanded 9 bps to 3.12% .
• Against consensus, EPS modestly beat while revenue missed on S&P Global’s definition; consensus Primary EPS was $0.87 vs actual $0.90*, and revenue consensus was $2.22B vs actual $2.07B* (see Estimates Context) (Values retrieved from S&P Global).
• Management raised FY 2025 NII growth guidance to 5.5–6.5% (from 5–6%), tightened FY NCO guidance to 43–47 bps, and guided Q3 2025 NII up ~1% with average loans stable to up 1% .
• Credit quality improved: NPAs fell 11% QoQ (commercial NPAs down 18%), NCO ratio decreased to 0.45%, and CET1 increased to 10.56% (+13 bps QoQ) .
• Potential near-term stock catalysts: raised NII guide, resumed buyback plan ($400–$500M expected in H2 2025), and ongoing Southeast branch expansion; watch solar lending origination shift post tax changes and capital markets softness .

What Went Well and What Went Wrong

• What Went Well

  • “Adjusted revenues and adjusted PPNR increased year-over-year by 6% and 10%, respectively,” with the highest adjusted PPNR growth rate in two years .
  • Deposit mix improved and DDA growth supported lower funding costs; interest-bearing liabilities costs fell 2–3 bps QoQ and 61–65 bps YoY .
  • Credit metrics strengthened: NPAs down 11% sequentially, commercial NPAs down 18%; early-stage delinquencies near historical lows .
  • CEO: “We expect to continue to generate strong, stable returns… during volatile environments… operating principles of stability, profitability, and growth – in that order.” .

• What Went Wrong

  • Reported revenue under S&P’s definition missed consensus despite bank-reported total revenue growth; capital markets fees remained muted YoY .
  • Commercial period-end loans dipped 1% QoQ on lower construction balances and reduced line utilization post April peak .
  • Solar lending: net charge-offs peaked in Q2 and future originations likely down 70–80% in 2026 due to tax credit changes (offset by planned home equity product pivot) .

Financial Results

Segment breakdown (Q2 2025)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO (Tim Spence): “Our balance sheet remains well-diversified and neutrally positioned… we accreted 13 basis points of CET1 and grew tangible book value per share by 18% over the past year… stability, profitability, and growth – in that order.”
• CFO (Brian Preston): “NII grew 7% YoY and 4% sequentially… NIM expanded nine basis points… $14 million interest recovery contributed ~3 bps; excluding it, NIM still improved at the high end of our guided range.”
• CCO (Greg Schreck): “We had good visibility into resolution of ~40% of commercial NPAs over the next few quarters; inflows dropped 77% QoQ, reflecting improved performance and proactive portfolio management.”
• CEO on strategic capital: “Organic growth first… density in chosen regions… we’ll resume share repurchases in the third quarter” .

Q&A Highlights

• Capital allocation/M&A: Focus remains on organic growth and market density; view consolidation as likely but not a strategy in itself .
• Solar lending: Existing credits unaffected by tax changes; expect net solar charge-offs to decline 15–20% QoQ in Q3 and again in 2026; originations to shift toward home equity solution on Dividend platform .
• Margin drivers: Better DDA performance and fixed-rate repricing; base case for 2–3 bps quarterly NIM improvement to ~3.15% year-end (ex interest recovery) .
• Loan growth/utilization: Commercial pipelines up ~50%; utilization tapered post-April; expect balanced growth in H2 2025 .
• Stablecoins/payments: Opportunity in cross-border settlement and on/off-ramping; less impact expected on domestic POS due to rewards/credit features economics .
• Buybacks: Target CET1 ~10.5%; expect $400–$500M in buybacks over the remainder of 2025, balancing organic growth .

Estimates Context

• EPS: Small beat in Q2 (consensus $0.87* vs actual $0.90*).
• Revenue: Miss in Q2 (consensus $2,221.7MM* vs actual $2,072.0MM*). Note S&P’s revenue definition may differ from bank-reported total revenue (FTE $2,250B) .
  Values retrieved from S&P Global.

Key Takeaways for Investors

• Earnings quality: Positive operating leverage for the third consecutive quarter, expanding NIM, and disciplined expense control underpin EPS delivery; watch continued fee diversification momentum .
• Raised NII guide: Upgraded FY NII growth to 5.5–6.5%, signaling balance-sheet resilience even absent rate cuts; Q3 NII guide up ~1% .
• Credit normalization contained: NCO at 0.45% with improving NPAs; provision reflects macro scenario deterioration more than portfolio stress .
• Deposit strategy advantage: Rising DDA and core deposit mix reducing funding costs; Southeast expansion continues to add granular, insured deposits .
• Capital deployment: CET1 at 10.56% supports resuming buybacks ($400–$500M expected in H2 2025) while funding organic loan growth; new 100M share authorization adds flexibility .
• Solar pivot de-risks originations: Expect lower solar loan volumes in 2026 but plan HE-based solution; monitor loss cadence normalization in H2 .
• Watch capital markets: June showed better activity, but M&A advisory remains soft; upside if macro stabilizes .

Cross-Reference/Notes

• Q2 2025 results and operating statistics sourced from the 8-K earnings release and presentation .
• Earnings call commentary (themes, guidance clarifications, buyback expectations, macro) sourced from the Q2 2025 call transcript .
• Prior quarter context obtained from Q1 2025 and Q4 2024 transcripts .