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FIFTH THIRD BANCORP (FITBI)·Q1 2025 Earnings Summary

Executive Summary

  • Fifth Third delivered Q1 2025 diluted EPS of $0.71; adjusted EPS was $0.73 after a ~$0.02 negative impact from the Visa total return swap valuation, with management stating EPS excluding items exceeded consensus estimates .
  • Net interest income (FTE) was $1.442B and NIM expanded 6 bps sequentially to 3.03% on loan growth, deposit cost reductions, and fixed‑rate asset repricing; efficiency ratio was 61.0% (adjusted 60.5%), showing continued expense discipline .
  • Credit quality was stable: NCO ratio held at 0.46% sequentially; NPL ratio rose to 0.79% on two ABL credits, with management expecting resolution of ~40% of NPAs over coming quarters; ACL was 2.07% of loans .
  • FY25 guidance maintained: NII up 5–6%, average loans up 4–5%, adjusted noninterest income up 1–3%, adjusted noninterest expense up 2–3%, NCO ratio 40–49 bps, tax rate 22%; Q2 guide: NII up 2–3% q/q, average loans up ~1%, adjusted noninterest income up 2–6%, adjusted noninterest expense down ~5% .
  • Capital and liquidity remained strong: CET1 10.45% despite $225M buybacks; LCR 127%; loan‑to‑core deposit ratio 75%—supporting “record NII” potential even without rate cuts or further loan growth per management, a key stock catalyst .

What Went Well and What Went Wrong

What Went Well

  • Positive operating leverage: adjusted efficiency ratio improved 110 bps y/y to 60.5%; adjusted PPNR rose to $850M (vs $813M in 1Q24) on margin expansion and disciplined expenses .
  • Deposits and fees: interest‑bearing liabilities cost fell 20 bps q/q; adjusted noninterest income held up y/y (+1%) led by Wealth & Asset Management (+7% y/y to $172M) and Commercial Payments (+6% y/y to $153M) .
  • Management confidence and guidance: “We expect to achieve record NII… even if there are no rate cuts and no further loan growth,” reflecting balance‑sheet optionality and deposit funding strength .

What Went Wrong

  • Fee softness and capital markets: adjusted noninterest income fell 9% q/q; capital markets fees declined 27% q/q on softer M&A and syndications amid macro uncertainty .
  • Asset quality optics: NPL ratio increased to 0.79% (from 0.69% in 4Q24) due to two ABL credits entering nonaccrual; management expects resolution but headline NPAs rose sequentially .
  • Reported noninterest expense up 6% q/q (seasonal comp and payroll taxes), partially offset by market‑to‑market impacts on deferred comp; adjusted expenses up 7% q/q .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total revenue (FTE) ($USD Millions)$2,100 $2,175 $2,136
Diluted EPS ($USD)$0.70 $0.85 $0.71
Net Interest Income (FTE) ($USD Millions)$1,390 $1,443 $1,442
Noninterest income ($USD Millions)$710 $732 $694
Net Interest Margin (FTE) (%)2.86% 2.97% 3.03%
Efficiency ratio (FTE) (%)63.9% 56.4% 61.0%
Net charge-off ratio (%)0.38% 0.46% 0.46%

Segment noninterest income breakdown:

Category ($USD Millions)Q1 2024Q4 2024Q1 2025
Wealth & Asset Management$161 $163 $172
Commercial Payments$145 $155 $153
Consumer Banking$135 $137 $137
Capital Markets Fees$97 $123 $90
Commercial Banking Revenue$85 $109 $80
Mortgage Banking Net Revenue$54 $57 $57
Other Noninterest (loss) Income$23 $(4) $14
Securities (losses) gains, net$10 $(8) $(9)
Total Noninterest Income$710 $732 $694

Key KPIs:

KPIQ1 2024Q4 2024Q1 2025
CET1 Ratio (%)10.47% 10.57% 10.45%
Average portfolio loans & leases ($USD Millions)$117,334 $117,860 $121,272
Average deposits ($USD Millions)$168,122 $167,237 $164,157
NPL Ratio (%)0.61% 0.69% 0.79%
NPA Ratio (%)0.64% 0.71% 0.81%
Adjusted PPNR ($USD Millions)$813 $1,008 $850

Results vs Estimates (Wall Street S&P Global):

MetricQ1 2025 ActualQ1 2025 S&P Global Consensus
Diluted EPS ($USD)$0.71 Not available via S&P Global for Q1 2025 (tool access returned no Q1 2025 data). Values retrieved from S&P Global where available.*
Total revenue (FTE) ($USD Millions)$2,136 Not available via S&P Global for Q1 2025 (tool access returned no Q1 2025 data). Values retrieved from S&P Global where available.*

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Average loans & leases (incl. HFS)FY 2025 vs FY 2024Up 4–5% Up 4–5% Maintained
Net interest income (FY24 baseline $5.658B)FY 2025 vs FY 2024Up 5–6% Up 5–6% Maintained
Adjusted noninterest income (ex securities g/l; FY24 baseline $2.973B)FY 2025 vs FY 2024Up 1–3% Up 1–3% Maintained
Adjusted noninterest expense (ex NQDC mark‑to‑market; FY24 baseline $4.936B)FY 2025 vs FY 2024Up 2–3% Up 2–3% Maintained
Net charge‑off ratioFY 202540–49 bps 40–49 bps Maintained
Effective tax rateFY 202522% 22% Maintained
Average loans & leases (incl. HFS)Q2 2025 vs Q1 2025N/AUp ~1% New near‑term update
Net interest income (1Q25 baseline $1.442B)Q2 2025 vs Q1 2025N/AUp 2–3% (assumes 6/30/25 Fed funds 4.25%) New near‑term update
Adjusted noninterest income (ex securities g/l; 1Q25 baseline $721M)Q2 2025 vs Q1 2025N/AUp 2–6% New near‑term update
Adjusted noninterest expense (ex NQDC mark‑to‑market; 1Q25 baseline $1.308B)Q2 2025 vs Q1 2025N/ADown ~5% New near‑term update
Net charge‑off ratioQ2 2025N/A45–49 bps New near‑term update
Effective tax rateQ2 2025N/A22% New near‑term update

Other Q1 2025 press release context: The Board declared a $0.37 common dividend (payable April 15, 2025) and preferred dividends across series, consistent with capital distribution strategy .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Margin and NIINIM rose to 2.90% (Q3) and 2.97% (Q4); NII increased despite deposit cost moderation NIM 3.03%; NII flat q/q despite fewer days; management expects “record NII” in 2025 Improving margins; sustained NII momentum
Capital markets activityQ4 capital markets fees +16% y/y; Q3 +9% y/y Q1 capital markets fees −27% q/q on uncertainty; pipeline discussion cautious Softer near term; volatility weighing
Deposits/householdsQ4: deposit costs fell; household growth; dividend raised Demand deposits 25% of core; household growth +2% y/y; Southeast +5% Mix stabilization; continued retail growth
Tariffs/macroNot a focus in press releasesDeep discussion on tariff uncertainty; potential inflation uptick; clients planning price actions Elevated macro uncertainty
Credit qualityQ3/Q4 NCO ratio 0.48%/0.46%; NPL ratio rising but manageable NCO ratio 0.46%; NPL ratio up to 0.79% from ABL; CRE NPAs down; solar NPAs improved Stable charge‑offs; targeted NPA management
Southeast expansionBranch openings and density strategy highlighted in 2024 Accelerating to 50–60 branches/year through 2028; breakeven ≈3 years; strong deposit ramp Accelerating footprint build
Regulatory/legalRoutine items in Q4 (interchange litigation) Management expects more constructive regulatory environment; potential for industry consolidation Potentially supportive backdrop

Management Commentary

  • “We expect to achieve record NII within our existing guidance… even if there are no rate cuts and no further loan growth,” underscoring confidence in deposit funding and asset repricing .
  • “Adjusted fees… were up 1% versus the prior year. Commercial Payments grew 6%… Wealth and Asset Management revenue grew 7%,” reinforcing recurring fee diversification .
  • On macro risks: “We cannot predict what the final tariff policies will look like… We manage day‑to‑day to maximize optionality,” highlighting defensive posture .
  • CFO on capital: CET1 at ~10.5% targets maintained; pro forma CET1 including AOCI impact 8.3% and expected to improve with AOCI accretion; buybacks paced with loan growth .
  • Credit officer on NPAs: increase largely two ABL credits; portfolio well secured; visibility to resolve ~40% of NPAs over next couple quarters .

Q&A Highlights

  • Tariffs and client sentiment: Management sees price pass‑throughs likely; domestic producers may raise prices to offset foreign market volume; no widespread layoff plans indicated by clients .
  • Capital markets outlook: Activity slowed amid uncertainty; hedging conversations up; need a modest volatility decline for execution; cautious on second‑half recovery assumptions .
  • Solar lending: NPAs decreased >50% sequentially through customer support; expect better loss content in 2H 2025; production stable .
  • Expense levers: Variable comp in fee areas offsets revenue softness; continued branch build; incremental vendor discipline and operational efficiencies .
  • Estimates and reserves: Moody’s scenario‑driven reserve build (~$38M ACL build; scenario volatility can add ~$50M modeled) without idiosyncratic credit stress; still guiding NCO 40–49 bps .

Estimates Context

  • Management stated Q1 EPS excluding certain items exceeded consensus . S&P Global consensus for Q1 2025 EPS and revenue was not available via tool access during this analysis; thus, comparisons to Street figures cannot be quantified here. Values retrieved from S&P Global where available.*
  • Implication: Given margin expansion, stable NCOs, and y/y fee resilience, near‑term estimate revisions may tilt positively for NII and NIM, while capital markets‑linked fees likely trend lower amidst macro volatility .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin engine intact: NIM expanded to 3.03% and deposit costs fell 20–25 bps sequentially; management expects “record NII” in 2025 even without cuts or further loan growth—supportive for multiple expansion .
  • Credit stable despite NPAs uptick: NCO ratio held at 0.46%; ABL‑driven NPL increase appears manageable with resolution visibility, while CRE NPAs declined and solar NPAs improved—reducing tail‑risk optics .
  • Fee diversification mitigates volatility: Wealth (+7% y/y) and Commercial Payments (+6% y/y) offset capital markets softness; expect fees to recover with macro clarity .
  • Operating leverage discipline: Adjusted efficiency ratio 60.5% and Q2 expense down ~5% guide offer near‑term EPS support amid fee headwinds .
  • Capital return balanced with growth: $225M buybacks in Q1 with CET1 10.45% and ongoing AOCI accretion; expect $400–$500M buybacks later in 2025 depending on loan growth .
  • Southeast build‑out a structural deposit tailwind: accelerated branch plan (50–60/year) targets breakeven ≈3 years and multi‑year deposit seasoning, bolstering low‑cost funding .
  • Trading implications: Near‑term catalysts include Q2 NII +2–3% q/q and expense down ~5%; watch capital markets fee trends and tariff headlines for sentiment swings .
Primary sources used: Q1 2025 8-K earnings release and presentation, Q1 2025 earnings call transcript, Q4/Q3 2024 earnings press releases, and Q1 2025 dividends press release.