On Aug 20, we issued an updated research report on Fifth Third Bancorp FITB. Despite the surging level of expenses, the bank’s revenue performance and improving efficiency through the implementation of various strategies seem impressive.
Notably, the company has been able to gain analysts’ confidence over the past 30 days. Its earnings estimates for the current year have been revised slightly upward to $2.82. It carries a Zacks Rank #3 (Hold), at present.
The stock has rallied 8% so far this year compared with 8.6% growth recorded by the industry.
Fifth Third has a diverse revenue base along with growing deposit and loan base. These keep it well poised to undertake inorganic growth strategies. It continues to undertake efforts aimed at expanding non-interest income base, which now represents about 43% of total revenues.
Also, under the North Star initiatives, Fifth Third remains focused on making strategic investments, which are expected to result in revenue growth, expense savings and operational excellence.
With robust capital levels, the bank continues to focus on core deposit growth in its retail and commercial franchises by improving customer satisfaction, building full relationships and offering competitive rates.
Notably, a higher interest rate environment supported margin expansion in 2016, 2017 and in the first two quarters of 2018, after a declining trend for years. Furthermore, net interest income is expected to continue benefiting from loan growth and improved loan yields.
However, persistently rising operating expenses remain a major concern for the company. Its ongoing strategic investments in several areas, including technology, may further escalate costs in the near term.
Also, its significant exposure to commercial loans (nearly 65% as of Jun 30, 2019) indicates concentration risks for the company.
Stocks to Consider
BancFirst Corporation BANF has been witnessing upward estimate revisions for the past 30 days. Year to date, the company’s share price has been up 8%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bridgewater Bancshares, Inc. BWB has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has climbed nearly 8.2%, year to date. It carries a Zacks Rank #2, at present.
First Horizon National Corporation FHN has been witnessing upward estimate revisions for the past 30 days. Also, this Zacks #2 Ranked company’s shares have risen nearly 18% year to date.
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Fifth Third Bancorp (FITB) : Free Stock Analysis Report
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