Fifth Third's Profit Ticks Down, but C&I Lending Surges

Fifth Third Bancorp's (FITB) quarterly profit declined slightly as improvements in credit quality nearly balanced declining interest income and fee income.

The $121 billion-asset company earned a $413 million profit in the first quarter, down 2% from the same period in 2012, when the company recorded one-time gains from the initial public offering of Vantiv. Per-share earnings of 46 cents were 7 cents higher than the expectations of analysts polled by Bloomberg.

Results were aided by improved loan performance. The bank's provision for loan losses fell 31%, to $62 million, and chargeoffs declined 39%, to $133 million.

Fifth Third's emphasis on the commercial and industrial sector drove a 5%, or $4.4 billion, rise in average loan balances. Average commercial loan balances rose 8%, to $49.6 billion, and average commercial and industrial balances rose 16%, to $36.4 billion. Fifth Third extended a total of $7.6 billion to business customers on the quarter, it said.

Still, net interest income fell 1%, to $893 million, as the net interest margin contracted by 19 basis points, to 3.42%.

Noninterest income fell 3%, to $742 million, as revenue from the Vantiv IPO declined. It recorded $34 million of income from an adjustment on the valuation of Vantiv warrants in the first quarter, compared to $149 million of income related to the Vantiv sale in the year-prior period. Mortgage-banking revenue rose 7%, to $220 million, and card and processing revenue rose 11%, to $65 million. Revenue from service charges, corporate banking and investment advisory operations also rose slightly.

Noninterest expense was flat, at $978 million.