Fifth Third Bancorp Smashes Q4 Earnings Expectations with Strong Growth and Predictable Results
In a recent conference call, Fifth Third Bancorp delivered a stellar performance in the fourth quarter of 2024, exceeding expectations across various key metrics. The bank's Chairman, CEO, and President, Tim Spence, highlighted the company's ability to navigate challenging environments through its diversified business mix, defensive balance sheet positioning, and meticulous operational management.
Notably, Fifth Third reported adjusted earnings per share of $0.90 for the quarter, beating expectations with a 2% sequential and year-over-year revenue growth. The bank achieved an impressive adjusted return on equity (ROE) of 13.7%, outperforming its peers who have reported thus far. Core adjusted pretax profit before noninterest expenses (PPNR) exceeded $1 billion for the first time in several quarters, while the adjusted efficiency ratio improved to 54.7%.
Spence emphasized that the company's strong results were achieved despite significant changes in the industry outlook on interest rates, loan growth, regulation, and capital markets activity during the year. He noted that Fifth Third was one of only a few banks to achieve full-year guidance for net interest income (NII), fees, expenses, PPNR, and net charge-offs.
The bank also made significant progress in its growth strategies, particularly in its momentum banking platform and Southeast branch footprint expansion. This led to outsized growth in granular low-cost deposits, with the company ranking #1 among all large banks for year-over-year retail deposit growth measured on a cap deposit basis. The opening of 31 de novo branches in 2024 and an expected 60 new branches in the Southeast in 2025 should further bolster its market share.
In addition to its impressive growth, Fifth Third demonstrated resilience in lending, with investments generating granular diversified loan originations without compromising on pricing or risk. The company's strong C&I production from middle-market and key CIB verticals, as well as continued growth from tech platforms, contributed to a 3% sequential end-of-period basis increase in loans.
Spence also highlighted the bank's commitment to returning capital to shareholders, with $1.6 billion returned through share repurchases and dividend increases during the year. This, combined with an over 20-basis-point increase in CET1 ratio, demonstrates the company's efforts to prioritize shareholder value while maintaining a strong balance sheet.
The conference call also touched on the bank's competitive barriers, which Spence emphasized are exceedingly difficult to build in the banking business. He noted that Fifth Third has consistently invested in a limited number of strategies over time, and their impact is evident in its 2024 results and third-party accolades received during the year.
