Fifth Third(US:FITB)2024-04-19 17:11Financial Data and Key Metrics Changes - Earnings per share reported at $0.70, or $0.76 excluding certain charges, with all major income statement captions meeting or exceeding guidance [3][4] - Adjusted return on equity and return on assets are the highest among peers, indicating strong profitability [3][6] - Net interest income for the quarter was $1.4 billion, with interest-bearing deposit costs managed to increase only 1 basis point sequentially [95][90] Business Line Data and Key Metrics Changes - Treasury management revenue grew 11% year-over-year, driven by software-enabled managed services [4] - Wealth and asset management fee revenues increased by 10% year-over-year, supported by strong growth in Fifth Third Wealth Advisors [4] - Adjusted non-interest income decreased 1% year-over-year, primarily due to lower revenue in commercial banking, leasing, and mortgage [7] Market Data and Key Metrics Changes - Average core deposits decreased 1% sequentially, attributed to normal seasonality [8] - DDA as a percentage of core deposits fell to 25% from 26% in the previous quarter, indicating a continued migration of balances [79] - Full year average core deposit growth is forecasted at only 2% to 3%, down from 5% growth in 2023 [22] Company Strategy and Development Direction - The company emphasizes stability, profitability, and growth, aiming to navigate challenging economic environments effectively [70] - Plans to open 30 to 35 new branches in higher-growth markets while closing a similar number of branches [23] - Focus on maintaining balance sheet strength and flexibility in an uncertain economic environment [76] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the economic outlook, citing potential headwinds from inflation and geopolitical tensions [92] - The company expects net interest income to decrease by 2% to 4% for the full year, with a trough in net interest income and margin believed to be behind [81][90] - Credit performance remains stable, with expectations for net charge-offs in the range of 35 to 45 basis points [128] Other Important Information - The company has resumed share repurchases of $300 million to $400 million in the second half of 2024, contingent on a stable economic outlook [12] - The CET1 ratio stands at 10.44%, with expectations for stability in capital levels [126] Q&A Session Summary Question: Can you discuss the demand trends in more detail? - Management noted that while clients are not pessimistic, they are cautious regarding capital investments and M&A opportunities [106] Question: What is the current outlook for the US economy in 2024? - Management indicated that Moody's outlook has improved, with no significant slowdown expected in 2024 [141] Question: How does the company manage deposit competition? - The company believes the liquidity environment has stabilized, reducing the likelihood of intense competition for deposits [163] Question: What are the expectations for reserve building versus releasing? - Management expects a small reserve build in connection with loan growth, assuming no changes to the economic outlook [138]