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FITB Gives Q3 Update, Commercial Payment to Reach $1B in 5 Years

At the Barclays Global Financial Services Conference, Fifth Third Bancorp FITB provided an update on its third-quarter 2024 outlook. 

Fifth Third stated that total revenues are expected to rise 2-3% sequentially in the third quarter from its baseline of $2.2 billion compared with the previous guidance of 1-2% increase. Also, management updated its non-interest income, now expecting a 3-4% increase from its baseline of $717 million, up from the earlier projection of a 1-2% rise. 

Average loans and leases are now expected to remain flat compared with the previous outlook of a stable to increase of approximately 1%. 

The net charge-off ratio is now expected to be approximately 50 basis points (bps), up from the previous projection of 40-45 bps.
 
Additionally, the Allowance for Credit Losses is now anticipated in the range of $10-$25 million build compared with the previous guidance of approximately $25 million build.

FITB Reiterates Q3 Outlook for NII & Noninterest Expenses

The company continues to expect net interest income (NII) to increase approximately 2% in the third quarter of 2024 from $1.39 billion in the second quarter of 2024.

Some other banks, such as Synovus Financial Corp. SNV and PNC Financial Services Group, Inc. PNC, updated NII guidance this month. SNV announced that its third-quarter 2024 NII is likely to be impacted by the muted loan growth environment and the impact of expected Federal Reserve rate cuts. PNC expects to report its third-quarter 2024 NII at the higher end of its previously projected 1-2% growth range. 

Noninterest expenses are projected to be up nearly 1% from $1.2 billion recorded in the last reported quarter.

FITB Expects Strong Commercial Payment Growth

Fifth Third is making efforts to accelerate growth in its commercial payment platform through strategic partnerships.

In line with this, at the Barclays conference, FITB discussed about its embedded payment platforms and how the company is leveraging these payment platforms to drive growth in the long term.

On Sept.5, FITB’s embedded payments platform, Newline, entered into a collaborative agreement with Trustly, the global leader in Open Banking Payments, to augment the money movement in the United States. Through this, the companies will advance innovation across the money movement landscape, encompassing pay-by-bank arrangements and payments made through the Automated Clearing House and Real Time Payments networks. 

Through these efforts, FITB expects commercial payments to be a $1 billion business in the next five years.

FITB Commercial Payment Growth Trend

FITB Financials
FITB Financials


Image Source: FITB Financials


FITB’s Other Growth Drivers

Fifth Third has expanded over the years through various strategic acquisitions. The company completed the acquisition of Big Data LLC in 2023, adding national healthcare revenue cycle capabilities to its operations. This will, thereby, advance its digital payments and managed services offerings.  

The company has also made efforts to enhance its presence in the Southeast and reduce its footprint in the Midwest region. With such efforts, Fifth Third has diversified its revenue base, which will support the company’s top-line growth in the upcoming period.

In the past six month, shares of Fifth Third have risen 13.5% compared with the industry’s growth of 6.6%. 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Currently, FITB carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Fifth Third Bancorp (FITB) : Free Stock Analysis Report

Synovus Financial Corp. (SNV) : Free Stock Analysis Report

The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report

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