FIFTH THIRD BANCORP Q2 FY2025 earnings call

• Earnings Performance: Earnings per share exceeded estimates, adjusted revenues and NII grew, and PPNR increased with positive operating leverage. - Credit Metrics: Net charge-offs were strong, NPAs declined sequentially. - Strategic Investments: Significant expansion in the Southeast with branch openings, digital lending channels (Provide, home equity) and tech investments (AI in mobile app, Newline payments). - Product Innovations: Consumer mobile app recognized for high user satisfaction, free will initiative for customers, and Newline payments platform driving revenue growth.

In the second quarter of 2025, Fifth Third reported earnings per share of $0.88 (or $0.90 excluding certain items) which exceeded consensus estimates. Adjusted revenues grew 6% year-over-year, led by a 7% increase in net interest income (NII). Adjusted pre-provision net revenue (PPNR) rose 10%, and the company achieved 250 basis points of positive operating leverage. Net charge-offs were 45 basis points, at the lower end of the guidance range. Tangible book value per share increased 18% from the prior year and 5% sequentially. In the Consumer Bank, net new households grew 6% in the Southeast. Commercial Banking's Southeast regions contributed over half of total middle market loan growth. Wealth Management's Southeast markets saw assets under management grow 16% year-over-year. The Consumer mobile app was ranked #1 in user satisfaction among regional banks, and the Newline embedded payments platform had 30% revenue growth with over $1 billion increase in commercial deposits connected to its services.

• Full year NII is expected to increase to 5.5% - 6.5%, up from earlier guidance. - Full year adjusted noninterest income is projected to rise 1% - 2%. - Full year adjusted noninterest expense is expected to increase 2% - 2.5%. - The full year net charge-offs range has been tightened to 43 - 47 basis points. - The company anticipates achieving record NII and full year positive operating leverage approaching 2%.

• Risk related to the solar industry due to the tax bill eliminating residential solar tax credits, affecting Dividend's origination volumes. - Economic uncertainty impacting commercial loan production and utilization trends. - Regulatory changes and competitive dynamics in the banking sector posing potential challenges.

Q: Ebrahim Poonawala inquired about capital allocation and solar industry risk.

A: Tim Spence stated capital priorities are on organic growth first, and Bryan Preston discussed the solar portfolio's credit trends and plans for a new home equity product on the Dividend platform.

Q: Robert Scott Siefers asked about margin improvement and competitive dynamics.

A: Bryan Preston mentioned strong DDA performance and rational deposit competition.

Q: Ryan Nash questioned loan growth and Southeast expansion.

A: Tim Spence talked about consumer loan growth drivers and the accelerated Southeast branch expansion.

Q: Thomas Leddy asked about stablecoins and regulatory relief.

A: Tim Spence elaborated on stablecoin use cases for the bank and the benefits of regulatory relief for Fifth Third.

Q: Erika Najarian asked about balance sheet mix and deposit strategy.

A: Bryan Preston said the bank is focused on balanced growth and core deposit funding.

Q: Mike Mayo asked about loan growth and credit.

A: Tim Spence and Greg Schroeck discussed commercial loan growth and positive credit resolution trends.

Q: Steven Alexopoulos asked about stablecoins and business impact.

A: Tim Spence explained the on-ramp and off-ramp opportunities for Fifth Third related to stablecoins