Fifth Bancorp III FITB is due to announce fourth-quarter and 2021 results on January 20, before the opening bell. FITB’s earnings and revenue for the December quarter are expected to be above the figures reported last year.
Before we analyze the factors that may have affected fourth-quarter earnings, let’s take a look at 5th Third’s performance over the past few quarters.
In the last reported quarter, the bank’s earnings beat Zacks’ consensus estimate. FITB’s performance showed revenue growth, supported by fees and net interest income (NII). Also, taking advantage of credit losses came as a tailwind. However, the results were largely impacted by marginally higher expenditures and soft loan growth.
This Cincinnati, Ohio-based lender has a surprisingly impressive history. Earnings beat estimates in all four subsequent quarters, averaging 19.7%.
FITB’s activities in the quarter to be announced were insufficient to gain analysts’ confidence. As a result, Zacks’ estimate of fourth-quarter earnings consensus of 91 cents has not changed in the past 30 days. However, the figure indicates a 3.4% rise from last year’s figure. The consensus estimate for revenue is capped at $2.01 billion, indicating 2.3% growth over last year’s figure.
The following are the factors that may have an impact on the quarterly performance of the Fifth Third:
So: In the fourth quarter, which is a strong seasonal quarter for loan growth, lending activity saw a decent acceleration, back-to-back with the previous quarter. According to the Federal Reserve’s latest data, business and industrial loans, mortgage loans and consumer loan portfolios remained strong in October and November. Amid this, FITB likely saw decent loan growth in the fourth quarter.
The slope of the yield curve (the difference between short and long-term interest rates) may have supported the bank’s net interest margin (NIM). The 10-year US Treasury yield rose 1.52% at the end of December by 4 basis points from 1.48% at the end of September. Thus, the National Insurance Institute is likely to have received some strengthening.
Also, Zacks Consensus’ estimate of average interest-earning assets of $186 billion for the quarter is up 1.7% from the previous quarter’s figure. This is expected to be the driver of interest income for the fourth quarter.
The consensus mark of $1.19 billion for the National Insurance Institute indicates a slight increase, sequentially.
Management expects average loans and rents to rise 1% compared to the previous quarter. Compared to the previous quarter’s level, the NII is estimated to decline by 1% while the net interest margin is expected to decline by three to four basis points due to pressure in loan returns.
Revenue without interest: According to Federal Reserve data, deposits improved in the quarter, led by stimulus-driven liquidity and a rise in money market balances. This may have boosted revenue from service fees on deposits. The consensus estimate of $154 million for the same period is 1.3% higher than the actual numbers for the previous quarter.
Mortgage rates rose sequentially in the quarter to be reported. Also, it is estimated that mortgage creation activities have declined significantly, as higher rates have hampered refinancing activity. The Zacks consensus estimate of net mortgage banking revenue is held at $55 million, indicating a 36% decrease from the previous quarter’s figure.
Card charges are likely to improve as consumer spending rises due to lower unemployment and upbeat consumer optimism.
Zacks’ estimate of non-interest income is estimated at $840 million, indicating a marginal rise, sequentially. Fifth, third, non-interest income is expected to rise 6 percent from the previous quarter.
expensesThird: The continued strategic investments of the third in areas such as technology may have led to an escalation of expenditures. This rise in costs may hinder the expansion of net income in the coming period.
On a sequential basis, excluding seasonal items, management expects expenses to be flat, to reach 1% in the fourth quarter.
Let’s look at what our quantitative model predicts:
A third fifth does not have the right combination of the two key components – a positive ESP for earnings and Zacks rank #3 (Hold) or higher – to increase the odds of winning earnings.
You can detect the best stocks to buy or sell before they are reported with the ESP earnings filter.
ESP earnings: ESP for the fifth third is -1.27%.
rank zax: 3rd 5th currently holds a Zacks rank of 3rd.
Stocks that require a look
Khartoum Financial Bank BOCF, The PNC Financial Services Group, Inc. PNC and Huntington Banks Incorporated HBAN is a few companies worth considering because these have the right set of items to beat earnings in their upcoming releases, according to our model.
BOK Financial has an ESP of +3.64% and a Zacks ranking of 3 at present. Bank of Khartoum is scheduled to announce its fourth-quarter and full-year results on January 19.
Over the past 30 days, BOKF’s Zacks consensus estimate for quarterly earnings has moved slightly down.
PNC Financial is scheduled to release its 2021 fourth quarter and annual earnings on January 18. you can see The full list of Zacks #1 stocks (strong buy) today is here.
PNC’s fourth-quarter earnings estimates have fallen slightly over the past month.
Huntington Bancshares is scheduled to report earnings on January 21. HBAN, which is currently at number three in the rankings, has an ESP of +1.46%.
The Zacks consensus estimate of Huntington Bank’s fourth-quarter earnings remained unchanged over the past month.
Stay up-to-date with upcoming earnings announcements with the Zacks Earnings Calendar.
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