Tags: FITB | growth | banks | stocks

Fifth Third Bancorp Bucks the Trend

By    |   Wednesday, 17 Aug 2011 11:37 AM

Not all financial institutions are battling wild swings in the stock market, regulatory uncertainty, and a tepid economy in general. Some are reporting business that resembles pre-recession America. Take Fifth Third Bancorp (FITB). The bank says stronger mortgage, credit-card, and corporate banking businesses helped pump up profits more than double during the second quarter.

The Cincinnati financial institution reported net income of $328 million, or 35 cents per share, in the quarter, up 152 percent from the same period a year earlier. "Fifth Third's second quarter results were strong and reflected continued improvement in credit trends," says the bank's president and CEO, Kevin T. Kabat.

"Bottom-line results were the best Fifth Third has generated since 2007 and drove strong returns," Kabat says. "Overall, we expect second-half 2011 results to produce similarly strong or stronger returns and build upon the 11 percent growth in tangible book value per share we've generated over the past year."

Economic fate

The problem with the banking sector, analysts say, is that the fate of the economy remains up in the air, especially with an unemployment rate that refuses to come down and growth bouncing along the bottom.

Federal Reserve officials admit that the economy has not performed as well as once predicted, and many private economists are warning that a double-dip recession may be brewing.

That's not good news for banks, which ultimately depend on consumers to spend again and fuel robust economic activity.

"Despite some improvements in asset quality trends and capital levels, the tepid economic recovery coupled with limited job growth undermine the likelihood of a return to normalcy by putting pressure on home prices, consumption, and investment," says Sean Jones, Senior Vice President at Moody's Investors Service.

"At the same time, regulatory reform and increased competition are negatively affecting bank earnings."

Still, some analysts are sticking with positive outlooks on Fifth Third Bancorp. Both Robert W. Baird and FBR Capital upgraded the bank's stock to outperform from neutral and market perform, respectively.

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Not all financial institutions are battling wild swings in the stock market, regulatory uncertainty, and a tepid economy in general. Some are reporting business that resembles pre-recession America. Take Fifth Third Bancorp (FITB). The bank says stronger mortgage,...
FITB,growth,banks,stocks
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2011-37-17
Wednesday, 17 Aug 2011 11:37 AM
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