Fifth Third Bancorp (NASDAQ:FITB) NII increases 1%

Fifth Third Bancorp (NASDAQ:FITB) stock fell 1.84% (As on Jan 21, 12:06:43 AM UTC-4, Source: Google Finance) after the company’s earnings totaled $627 million in the fourth quarter of FY 21, compared with $569 million, in last year’s fourth quarter. Net interest income of approximately $1.2 billion increased 1% sequentially, reflecting C&I loan growth, $10 million in seasonal mutual fund dividends, and $18 million in prepayment penalties received in the investment portfolio as well as a reduction in long-term debt. These items were partially offset by lower loan yields and a decline in PPP-related income, which was $36 million this quarter compared to $47 million in the prior quarter. Excluding PPP, NII increased $19 million or 2% sequentially.

Moreover, compared to the prior quarter, reported net interest margin decreased four basis points, reflecting a $2.6 billion increase in interest-bearing cash and lower loan yields, partially offset by prepayment penalties and mutual fund dividends from our investment portfolio. Wealth and asset management revenue increased 13% and TM revenue increased 9%, offset by a $28 million reduction from lower TRA income and a 16% decline in mortgage banking. On the expense side, the largest contributor of the growth was elevated performance-based compensation, technology investments, and loan servicing expenses. These items were partially offset by the actions we took about a year ago to streamline the organization, including process reengineering, vendor renegotiations, and divestitures of noncore businesses, such as property and casualty insurance, HSA deposits, and 401(k) recordkeeping.

FITB in the fourth quarter of FY 21 has reported the adjusted earnings per share of 90 cents, which is inline with the analysts’ estimates for the adjusted earnings per share of 90 cents, according to figures compiled by Thomson Reuters.

Moreover, total average portfolio loans and leases increased 1% sequentially, including the PPP headwind. Excluding PPP, portfolio loans and leases increased 3% on an average basis and increased 5% on a period-end basis. Average total consumer portfolio loans increased 1% compared to the prior quarter, as continued strength in auto was partially offset by declines in home equity and other consumer loan balances. Average commercial portfolio loans and leases increased 2% compared to the prior quarter, reflecting growth in C&I loans. Nonperforming assets declined 6% sequentially with the NPA ratio declining five basis points. Criticized assets declined 13% sequentially, reflecting a significant improvement from COVID high-impact industries.

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