Fee Income to Support Fifth Third's (FITB) Earnings in Q2

Core Viewpoint - Fifth Third Bancorp (FITB) is expected to report a decline in quarterly revenues and earnings year-over-year, influenced by various factors including net interest income pressures and rising expenses [18]. Financial Performance - FITB has a strong earnings surprise history, beating estimates in the last four quarters with an average surprise of 8.52% [1]. - In the last reported quarter, earnings exceeded the Zacks Consensus Estimate, supported by increased non-interest income and deposit balances, although net interest income (NII) fell, limiting revenue growth [3]. - The Zacks Consensus Estimate for FITB's second-quarter earnings is 84 cents per share, reflecting a 3.5% decrease from the previous year [4]. Loan and Interest Income - Demand for commercial and industrial loans improved, while consumer loan demand weakened, with average interest-earning assets expected to show some improvement [5]. - FITB anticipates total average loans and leases to be stable at approximately $117.9 billion, indicating a slight increase from the previous quarter [6]. - Adjusted NII is expected to be stable to up 1% sequentially, with a consensus mark of $1.39 billion, also reflecting a 1% rise [7]. Non-Interest Income and Expenses - Non-interest income is projected to remain stable sequentially, with a consensus estimate of $720 million, indicating a 1.5% rise from the prior quarter [11]. - Management expects adjusted non-interest expenses to decline by nearly 7-8%, estimating total expenses to decrease by 2.3% sequentially to $1.31 billion [12]. Market and Economic Conditions - Mergers and acquisitions (M&As) have rebounded in Q2 2024, positively impacting commercial banking revenues due to improved financial performance and market conditions [8]. - Mortgage rates slightly decreased, which may have led to a modest rise in mortgage demand, although origination volumes remain lower than the previous quarter due to home price appreciation [9]. - Wealth and asset management revenues are expected to benefit from higher equity market performance, with the consensus estimate at $161 million, unchanged from the prior quarter [10]. Revenue Estimates - The consensus estimate for FITB's revenues is $2.11 billion, suggesting a 3.2% decline from the year-ago figure, while management expects adjusted total revenues to be stable sequentially [19]. - The Zacks Consensus Estimate for average interest-earning assets is $195.85 billion, indicating a slight rise from the previous quarter [20]. Additional Insights - The company is likely to face challenges in NII due to high interest rates and an inverted yield curve, which may pressure overall financial performance [21]. - Non-interest revenues are expected to benefit from stabilizing deposit balances, with service charges on deposits estimated at $152 million, indicating a marginal sequential increase [22]. - Card and processing revenues are projected to rise by 3.6% from the prior quarter, with a consensus estimate of $105.6 million [25].