Fifth Third Bancorp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Fifth Third Bancorp's Q3 2025 earnings call highlighted the proposed merger with Comerica, strong financial performance despite fraud impact, and continued investments in strategic growth areas like the Southeast and payments technology. The bank reiterated its commitment to delivering record net interest income (NII) and positive operating leverage.
Key Financial Results
Earnings per share (EPS) was reported at $0.91, or $0.93 excluding certain items.
Results include the impact of nearly $200 million of provision expense associated with the fraud at Tricolor.
Average loans increased 6% year-over-year.
Average demand deposits were up 3% year-over-year, led by 6% consumer DDA growth.
Adjusted revenues rose 6%, underpinned by 7% improvement in net interest income and 5% growth in fees.
Adjusted PPNR increased 11%, producing 330 basis points of positive operating leverage.
Adjusted ROA was 1.25%, ROTCE was 17.7%, and the efficiency ratio was 54.1%.
Tangible book value per share grew 7% year-over-year and 3% sequentially.
Business Segment Results
Middle market RM head count increased 8% year-over-year.
New client acquisition increased 40%, and average middle market loans increased 6%.
Advisor head count rose 10% year-over-year, while fees climbed 11%, and assets under management reached $77 billion in the quarter in wealth and asset management.
Franchise finance had another standout quarter, generating more than $40 million in annual commercial payments fees and $34 million in capital markets fees over the past two years.
Commercial payments fee growth reaccelerated to 3% sequentially.
Newline increased revenue by 31% year-over-year and grew deposits by more than $1 billion.
Capital Allocation
Repurchased $300 million in stock.
Raised common dividend by 8%.
Pausing share repurchases until the close of the Comerica acquisition.
Industry Trends and Dynamics
Discussion around the potential impact of tariffs and supply chain uniformity.
Mention of strong demand for clients attached to government infrastructure investments and AI.
Competitive Landscape
The merger with Comerica will create a company with a presence in 17 of the fastest-growing large US metro areas.
Fifth Third aims to leverage its strengths to accelerate the growth of Comerica's middle market franchise.
Discussion of the fragmented market in tech and life sciences post-SVB, presenting opportunities for Fifth Third.
Macroeconomic Environment
Discussion around the potential impact of tariffs and supply chain uniformity.
Moody's macroeconomic scenarios assume unemployment reaching 4.8% and 8.4% in 2026 respectively.
Growth Opportunities and Strategies
Investments in the Southeast, expanding the middle market sales force, and building high-growth recurring fee businesses.
Added 13 branches in the Southeast during the third quarter, including the first in Alabama, and expect to open 27 more before the end of the year.
Consumer households across the Southeast increased by 7% year-over-year.
Leveraging the de novo playbook to drive retail deposit growth in Comerica's Texas footprint, adding 150 branches.
Focus on modularity in retail expansion, aiming for consistent site selection and retail format.
Transitioning Direct Express program participants, with additional growth opportunities from the President's executive order mandating electronic payments for federal disbursements.
Deploying technology and lean manufacturing principles to produce savings and boost scalability.
Exploring opportunities in tech and life sciences, leveraging Comerica's practice and Fifth Third's Newline platform.
Financial Guidance and Outlook
Expects to deliver record NII regardless of the rate environment and produce 150 to 200 basis points of positive operating leverage for the full year.
Expects NII to be stable to up 1% from the third quarter, due to loan and core deposit growth, assuming two 25 basis point rate cuts during the fourth quarter.
Expects average total loan balances to be up 1%.
Expects adjusted non-interest income to be up 2% to 3%.
Fourth quarter adjusted non-interest expense is expected to be up 2%.
Full-year adjusted revenue is guided to be up nearly 5% and PPNR to grow 7% to 8%.
Fourth quarter net charge-offs are expected to be around 40 basis points.
The Comerica transaction is expected to close around the end of the first quarter of 2026.
