FIFTH THIRD BANCORP (FITB) Q3 2024 Earnings Summary

Executive Summary

Q3 2024 delivered resilient profitability despite macro volatility: diluted EPS was $0.78 with adjusted EPS $0.85 after $0.07 of notable items; NIM rose 2 bps to 2.90% and CET1 increased 13 bps to 10.75% .
Fee growth was broad-based (commercial banking +13% QoQ; wealth & asset management +3% QoQ) and disciplined expenses improved the adjusted efficiency ratio to 56.1% (-70 bps QoQ) .
Management raised the quarterly common dividend 6% to $0.37 and executed $200M of share repurchases; CET1 still rose, underscoring capital strength .
Outlook: management guides 4Q NII +1% QoQ, noninterest income +3–4%, loans stable to +1%, with $20–$40MM ACL build; they plan ~$300M of repurchases in 4Q, and expect record NII in 2025 absent major macro shocks .

What Went Well and What Went Wrong

What Went Well

“We produced a return on equity of 12.8%… Our adjusted efficiency ratio improved to 56.1%… and we are in a position to achieve positive operating leverage on both a sequential and year-over-year basis in the fourth quarter.” – CEO Tim Spence .
Fee momentum: commercial banking revenue +13% QoQ (bond fees, brokerage), wealth & asset management revenue +3% QoQ, service charges +3% QoQ, with adjusted noninterest income +4% QoQ .
Capital and liquidity: CET1 10.75% (+13 bps QoQ) alongside $200M buybacks (+4.9M shares reduced); LCR Category 1 compliance maintained; loan-to-core deposit ratio 71% .

What Went Wrong

Credit metrics normalized: NPL ratio rose to 0.59% (+7 bps QoQ), NPA ratio to 0.62% (+7 bps), NCO ratio 0.48% (down 1 bp QoQ but +7 bps YoY); provision increased to $160MM .
Noninterest expense rose 2% QoQ (performance-based comp; tech & communications), and reported EPS was pressured by $47MM pre-tax Visa TRS mark, $10MM Mastercard litigation, and $9MM severance .
Year-over-year margin headwinds persisted: NIM 2.90% vs 2.98% in 3Q23 due to higher funding costs and elevated liquidity (cash and short-term investments ≈$25B at quarter-end) .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024
Total Revenue (FTE, $MM)	2,160	2,088	2,138
Diluted EPS ($)	0.91	0.81	0.78
Adjusted EPS ($)	—	0.86	0.85
Net Interest Income (FTE, $MM)	1,445	1,393	1,427
Noninterest Income ($MM)	715	695	711
Noninterest Expense ($MM)	1,188	1,221	1,244
NIM (FTE, %)	2.98%	2.88%	2.90%
Efficiency Ratio (FTE, %)	55.0%	58.5%	58.2%
CET1 Capital (%)	9.80%	10.60%	10.75%
Provision for Credit Losses ($MM)	119	97	160
NCO Ratio (%)	0.41%	0.49%	0.48%
NPL Ratio (%)	0.47%	0.52%	0.59%

Noninterest income components:

Noninterest Income Component ($MM)	Q3 2023	Q2 2024	Q3 2024
Service Charges on Deposits	149	156	161
Commercial Banking Revenue	154	144	163
Mortgage Banking Net Revenue	57	50	50
Wealth & Asset Management	145	159	163
Card & Processing	104	108	106
Leasing Business Revenue	58	38	43
Other Noninterest Income	55	37	15
Securities Gains (Losses), Net	(7)	3	10

Balance and funding KPIs:

KPI	Q3 2023	Q2 2024	Q3 2024
Average Deposits ($MM)	165,644	167,194	167,196
Loan-to-Core Deposit Ratio (%)	74	72	71
Rate Paid on Interest-Bearing Liabilities (%)	3.10	3.39	3.38

Segment breakdown (earnings call narrative and disclosures emphasized fee businesses; company did not provide a Q3 segment table in accessible excerpts; latest detailed segment presentation was provided in prior quarters).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Income (FTE)	Q4 2024 vs Q3 2024	—	Up ~1% (baseline $1.427B)	Raised sequentially
Noninterest Income (Adj., ex sec g/l)	Q4 2024 vs Q3 2024	—	Up ~3–4% (baseline $748MM)	Raised sequentially
Total Revenue (FTE, incl. sec g/l)	Q4 2024 vs Q3 2024	—	Up ~1–2% (baseline $2.185B)	Raised sequentially
Avg Loans & Leases	Q4 2024 vs Q3 2024	—	Stable to +1%	Maintained/slightly higher
Noninterest Expense (Adj.)	Q4 2024 vs Q3 2024	—	Stable (baseline $1.225B)	Maintained
Net Charge-off Ratio	Q4 2024	—	Similar to slightly down vs Q3	Slight improvement
ACL Build	Q4 2024	—	~$20–$40MM build	Build
Effective Tax Rate	Q4 2024	—	22–23%	Maintained
Capital Return	Q4 2024	—	Share repurchases targeted at ~$300MM; potential further depending on loan growth	Increased buybacks
Dividend	Q3 2024	$0.35	$0.37 (+6%)	Raised

Earnings Call Themes & Trends

Topic	Q1 2024 (Prev Mentions)	Q2 2024 (Prev Mentions)	Q3 2024 (Current)	Trend
AI/Technology Initiatives	Continued tech investments; tech & comms expenses stable	Tech & comms +6% QoQ	Deployed Copilot and AI training bank-wide; tech & comms +6% QoQ	Building internal AI capability
Rates/Deposit Betas	Interest-bearing deposit costs +1 bp QoQ	+4 bps QoQ; NIM +2 bps	First month-over-month decrease in interest-bearing core deposit costs; mid‑40s cumulative betas achieved; expect two quarters to reach terminal betas as CDs reprice	Liability costs starting to decline
Fee Businesses (Wealth, Payments, Capital Markets)	Wealth +10% YoY; treasury mgmt fees +11% YoY	Wealth +11% YoY; commercial payments +12% YoY	Wealth record revenue; commercial payments +10% YoY; capital markets rebound	Strong secular growth
Southeast Expansion	Household growth +3% YoY; branch build ramp	Market share gains; de novo program ongoing	Southeast deposits +16% YoY; 19 de novo branches in 4Q; footprint mix toward 50/50 by 2028	Accelerating build-out
Credit & CRE	CRE NCO ~0; Office CRE ~1% of loans	CRE criticized ratio low; non-owner occupied <10% loans	Non-owner occupied CRE 9.6% of loans; Office $1.2B (1% of loans); CRE NCOs ~0	Conservative CRE exposure
Regulatory/Legal Items	FDIC assessment, Visa TRS, Mastercard litigation	Visa TRS & legal remediations	Visa TRS $47MM pre-tax; Mastercard litigation $10MM; severance $9MM	Non-GAAP adjustments recurring

Management Commentary

Tim Spence: “Adjusted EPS…$0.85…exceeding the guidance we provided… Our adjusted efficiency ratio improved to 56.1%… and we are in a position to achieve positive operating leverage on both a sequential and the year-over-year basis in the fourth quarter.” .
Bryan Preston: “Net interest income… increased 2% sequentially… net interest margin improved 2 basis points. Increased yields on new loan production were the primary driver… interest-bearing core deposit costs… down… during this rate cycle.” .
Tim Spence on strategy: “In the Southeast… deposits grew by 16% over the last twelve months. We generated record revenue in our Wealth & Asset Management business… Commercial Payments revenue grew 10% compared to the year‑ago quarter.” .
Bryan Preston on capital: “We ended the quarter with a CET1 ratio of 10.8%… we now expect to increase our share repurchases in the fourth quarter to $300 million…” .

Q&A Highlights

Deposit betas and NII trajectory: FITB has achieved mid‑40s cumulative betas since recent cuts and expects terminal betas over ~two quarters as CDs roll; fixed‑rate asset repricing is a tailwind through 4Q25 .
Yield curve normalization: A steeper curve would be “very powerful” for NII via liability relief and preserved asset spreads, with potential for NIM expansion back toward ~3.15–3.25% over time as excess cash is redeployed .
Loan growth and paydowns: Strong production offset elevated paydowns and a 1% utilization headwind; pipeline strength in middle market and CIB supports stabilization and modest growth into 2025 .
Capital allocation: Management targets 35–45% dividend payout and uses buybacks dynamically given strong capital generation; increased buybacks do not constrain organic growth investments (branch IRRs ~18–20%) .
Competition/private credit: FITB avoids structures (e.g., payment-in-kind) that do not align with its risk appetite; SNC balances down ~11% YoY but nearing inflection as production returns .

Estimates Context

Wall Street consensus (S&P Global Capital IQ) was unavailable at time of this analysis; comparisons to consensus could not be made. Values retrieved from S&P Global were not available due to system limit, so estimate-based beats/misses are not shown.*
Management noted adjusted EPS $0.85 exceeded their prior guidance from the Q2 call; investors should update models for higher Q4 NII (+1%) and noninterest income (+3–4%) trajectories .

Key Takeaways for Investors

Sequential operating leverage returned in Q3 (NII +2%, NIM +2 bps; adjusted efficiency 56.1%); Q4 guide suggests continued revenue growth with stable expenses, a setup for margin expansion into 2025 .
Fee engines (Wealth, Payments, Capital Markets) are delivering double-digit YoY growth with diversified, less-cyclical drivers—supporting earnings durability into a rate‑cutting cycle .
Capital strength remains a differentiator: CET1 10.75% with rising tangible book value and buybacks/dividend increases; liquidity robust with loan-to-core deposit at 71% and Category 1 LCR compliance .
Credit normalization manageable: higher NPL/NPA from low bases, stable 30–89 day delinquencies at 0.24%, CRE exposures conservative (Office ~1% of loans; non-owner occupied CRE <10%) .
Tactical rate play: deposit costs are starting to decline, and fixed‑rate asset repricing provides tailwinds; a steeper curve would amplify NII and NIM improvement (management expects record NII in 2025 absent macro disruptions) .
Regional growth is a multi‑year catalyst: Southeast deposits +16% YoY and de novo program accelerating (19 branches in 4Q), driving mix shift and fee/customer acquisition .
Near-term trading implications: Positive momentum on NII/NIM and capital return with contained credit trends supports constructive sentiment into 4Q earnings; watch deposit beta cadence, paydown trends, and capital markets activity .

Citations: *Values retrieved from S&P Global.