Profits at Fifth Third Bancorp rose during the second quarter as the company benefited from higher interest rates, lower taxes and a one-time gain. However, fee income slowed in two key categories.
The $141 billion-asset company reported earnings of $586 million, compared with just over $1 billion a year earlier. Earnings per share were 80 cents.
Fifth Third recorded a pretax gain of $205 million from the sale of shares in Worldpay, the payment processing company previously known as Vantiv. Fifth Third has steadily whittled down its stake in recent years, recording a series of one-time quarterly gains.
During the quarter, net interest income rose 8%, to just over $1 billion. The net interest margin increased 20 basis points, to 3.21%.
Total average loans rose 1%, to $92.6 billion, as an uptick in business lending helped to offset ongoing declines in home equity and auto loans.
Noninterest income — excluding several one-time items, including the Worldpay sale — dipped 1% to $567 million, weighed down by lower service charges and mortgage banking revenue.
Noninterest expenses, meanwhile, climbed 8% because of double-digit increases in technology and salary costs.
As of June 30, Fifth Third’s effective tax rate was 15.5%, compared with 25.9% a year earlier.
In a press release Thursday, CEO and Chairman Greg Carmichael said Fifth Third is finalizing its management team in Chicago, after the announcement in May that it had agreed to buy Chicago-based MB Financial.
“We are looking forward to completing the merger as soon as possible so that we can begin realizing the substantial cost and revenue synergies we have identified,” Carmichael said.
