Fifth Third Profit Rises on Credit Quality, Sale of Vantiv Shares

Fifth Third Bancorp (FITB) in Cincinnati reported a 16% rise in quarterly earnings thanks to improvements in credit quality and gains from its gradual divestiture of a payments subsidiary.

The $126 billion-asset company earned $421 million in the third quarter, it said Thursday. Per-share earnings of 47 cents were 23 cents off the estimates of analysts polled by Bloomberg.

Fifth Third’s net interest income fell 1% compared with the third quarter of 2012, to $898 million, as its net interest margin contracted by 25 basis points, to 3.31%. Total loans and leases rose 5%, to $89.2 billion, which is the highest figure in the bank’s history, it said.

Provision for loan losses fell 22%, to $51 million, and net chargeoffs fell 31%, to $109 million.

Fifth Third’s noninterest income rose 7%, to $721 million. It recorded $85 million in gains from the sale of its shares in Vantiv, which further reduced its stake in the payments processor, formerly Fifth Third Payments, to about 25%. It also recorded a $6 million positive valuation on a Vantiv warrant. In the same period in 2012, it recorded a $16 million negative valuation related to its Vantiv shares.

Additionally, service charges, corporate banking revenue and card and processing revenue all rose; those increases offset a 40% decline in mortgage banking revenue, to $121 million.

Fifth Third’s held overhead costs in check, as noninterest expense fell 5%, to $959 million.