Fifth Third warns of lower interest income in 2024
Jan 19 (Reuters) - Fifth Third Bancorp posted a 30% drop in quarterly profit and warned of a lower net interest income in 2024 as sluggish loan growth and higher deposit costs pressure the bank's margins.
The Federal Reserve's monetary policy tightening that had benefited banks last year are now weighing on them as the high rates have also resulted in slower growth in loans and forced banks to pay higher deposit costs to retain customers from migrating to higher-paying alternatives.
Fifth Third said its net interest income (NII) this year could be 2%-4% lower than $5.85 billion in 2023, and expects total revenue to fall between 1% and 2%.
Its fourth-quarter NII fell 10% to $1.42 billion from a year earlier, and net profit dropped to $492 million, or 72 cents per share, from $699 million, or $1.01 per share, hurt by a one-off charge of $224 million to replenish a deposit insurance fund.
Net profit of several financial institutions, including larger peers Citigroup and Wells Fargo, was affected this quarter, as they paid a large fee to the Federal Deposit Insurance Corp (FDIC) to replenish an insurance fund.
The banking regulator's fund, which insures customer deposits in the case of a bank failure, was drained of $16 billion following the collapse of two banks in early 2023.
Fifth Third's total revenue for 2023 rose 4% at $8.73 billion.
(Reporting by Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli)
