Fifth Third Bancorp Investment A Beacon Of Hope Amid Macro Headwinds, Analyst Says

Raymond James analyst David J. Long initiated coverage on Fifth Third Bancorp FITB at a Market Perform rating. 

The analyst believes FITB is well positioned to deliver steady long-term loan growth, boosted by its investment in Southeastern U.S. 

However, the analyst sees near-term loan and deposit growth headwinds on the uncertain economic outlook and higher interest rates as a matter of concern.

Consequently, the analyst expects rising deposit costs and the mix shift to higher-cost deposits from noninterest-bearing deposits to result in NIM contraction in second half of 2023 and 2024.

Long thinks FITB's top-10 deposit market share in several Midwest markets should drive consistent loan growth. 

However, the analyst expects loan balances to decline in the second half of 2023 on slowing economic growth and optimizing banks' risk-weighted asset base.

The analyst estimates the adjusted EPS of $3.26 on revenues of $8.728 billion in 2023 and $3.11 on $8.579 billion revenues in 2024.

Last month, FITB reported second quarter 2023 sales of $2.19 billion, which was in line with the consensus and adjusted EPS of 87 cents topped the Street view of 83 cents, including a negative impact of 5 cents from the Visa total return swap valuation.

Price Action: FITB shares are trading higher by 0.92% at $25.67 on the last check Thursday. 

Image: Fifth Third Bank