Fifth Third's Q4 Earnings Top Estimates on Higher NII, Lower Provisions

Core Insights - Fifth Third Bancorp (FITB) reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.08, exceeding the Zacks Consensus Estimate of $1.01, and up from 90 cents in the prior-year quarter [1][2][8] - The company's net income available to common shareholders (GAAP basis) was $699 million, reflecting a 20% year-over-year increase [2] - Total quarterly revenues (FTE) reached $2.34 billion, an 8% increase year over year, surpassing the Zacks Consensus Estimate of $2.32 billion [3] Financial Performance - For 2025, total revenues (FTE) were $9.04 billion, a 6% increase year over year, also exceeding the Zacks Consensus Estimate of $9.01 billion [3] - Net interest income (NII) for the fourth quarter was $1.53 billion, up 6% year over year, driven by proactive deposit and wholesale funding management [4] - Non-interest income rose 11% year over year to $811 million, primarily due to increases in wealth and asset management, commercial payment, and consumer banking revenues [5] Expenses and Efficiency - Non-interest expenses increased 7% year over year to $1.31 billion, attributed to rising costs across all components [5] - The efficiency ratio improved to 55.8%, down from 56.4% in the year-ago quarter, indicating enhanced profitability [5] Loan and Deposit Trends - As of December 31, 2025, portfolio loans and leases slightly declined to $122.6 billion, while total deposits increased by 3% to $171.8 billion [6] - The provision for credit losses was reported at $119 million, down 34% from the previous year [7] Credit Quality - The total non-performing portfolio loans and leases decreased to $797 million, a 6.6% decline year over year [9] - Net charge-offs in the fourth quarter fell to $125 million, or 0.40% of average loans and leases, down from 0.46% in the prior-year quarter [9] Capital Position - The Tier 1 risk-based capital ratio was 11.82%, slightly down from 11.86% in the prior-year quarter, while the CET1 capital ratio increased to 10.77% from 10.57% [10] Strategic Outlook - The company anticipates closing its merger with Comerica on February 1, 2026, which is expected to enhance scale, profitability, and geographic reach [11]