FIFTH THIRD BANCORP Q4 FY2024 earnings call

Management Statement and Operational Highlights: Tim Spence noted that Fifth Third reported earnings per share of $0.85 or $0.90, excluding certain items, exceeding third quarter guidance. Adjusted return on equity was 13.7%, the highest among peers. Revenues grew 2% sequentially and 2% year-over-year. Core adjusted PPNR exceeded $1 billion, and the efficiency ratio improved to 54.7%. Loan growth was strong, with period-end loans up 3% in December. Wealth and Asset Management total assets under management grew 17% to $69 billion. Commercial Payments grew 8% in 2024, with 40% of new relationships Payments-led. The bank modernized its operating platform, achieving over $150 million in annualized savings from lean value streams.

Segment Performance: For the fourth quarter, revenues grew 2% sequentially and 2% year-over-year. Core adjusted PPNR exceeded $1 billion for the first time in several quarters, and the adjusted efficiency ratio improved to 54.7%. In Commercial Banking, loan growth accelerated in December with a 3% period-end loan growth, and middle market loan production reached a three-year high. Wealth and Asset Management saw total assets under management grow 17% year-over-year to $69 billion. Commercial Payments business grew fee revenues by 8% in 2024, processing $17 trillion in volume. The bank completed general ledger and clearing platform conversions and launched term deposits on a modern cloud core, with cross-functional lean value streams achieving over $150 million in annualized savings.

Guidance: Fifth Third expects full-year net interest income (NII) to increase 5%-6% in 2025. Full-year average total loans are expected to be up 3%-4%. Adjusted non-interest income is projected to be up 3%-6%. For the first quarter, NII is expected to be flat with the fourth quarter of 2024, average total loan balances are expected to increase 2%, non-interest income excluding the TRA is down 6%-7% compared to the fourth quarter, adjusted non-interest expense is expected to be up 8% compared to the fourth quarter, charge-offs are in the 45-49 basis point range, and $225 million in share repurchases are expected in the first quarter.

Risks: The economy is a complex system with unpredictable changes. Labor availability is a major concern for middle market clients. Regulatory changes and economic uncertainty pose risks. There could also be potential challenges in deposit competition if loan growth becomes more robust.

Q: Scott Siefers asked about loan demand development and rate sensitivity.

A: Tim Spence and Bryan Preston discussed positive loan demand trends and neutral rate sensitivity.

Q: Mike Mayo asked about calling the turn for commercial loan growth.

A: Tim Spence said maybe, citing a favorable backdrop but uncertainty.

Q: Thomas Leddy asked about deposit rates and C&I non-accruals.

A: Bryan Preston discussed deposit rate outlook and Greg Schroeck talked about C&I non-accruals.

Q: Ebrahim Poonawala asked about fees and client acquisition.

A: Tim Spence explained fee segments and their independence from the balance sheet.

Q: Others asked about capital, M&A, returns, etc., with corresponding responses from Tim and Bryan.