On Jun 11, 2013, we reiterated our long-term recommendation on
Fifth Third Bancorp
) at Neutral based on its diversified traditional banking
platform, organic growth and strong capital base. However,
regulatory issues coupled with fundamental pressures on the
banking sector might act as deterrents to the company's
Fifth Third's first-quarter 2013 adjusted earnings per share came
in at 44 cents, beating the Zacks Consensus Estimate by a nickel.
The results also came ahead of the year-ago earnings of 36 cents.
Improved credit quality aided by lower provision for loans and
leases and a strong capital position were the positives for the
quarter. Moreover, increase in loans and deposits reflect the
company's organic growth. However, a decline in the top line and
escalated non-interest expenses remain major concerns.
As a significant capital market player, Fifth Third could benefit
from the material growth of the global capital markets. Its
strong consumer and commercial banking franchise and growing
asset management business are also set to benefit from the
cyclical recovery in the U.S. economy. Management's preference
for organic growth over acquisitions will be beneficial with
respect to cost and execution risk, over the long term.
However, the sluggish economic growth and the low interest-rate
environment are concerns for Fifth Third's top-line expansion.
Management expects second-quarter net interest income to decline
between $5 million to $10 million.
For Fifth Third, the Zacks Consensus Estimate for 2013 jumped
6.7% to $1.75 as 18 out of 20 estimates moved higher over the
last 60 days. For 2014, 14 out of 19 estimates moved north,
lifting the Zacks Consensus Estimate by 3.0% to $1.74 over the
same time frame. Hence, Fifth Third carries a Zacks Rank #2
Other Major Banks to Consider
Some major banks that are also worth considering include
The PNC Financial Services Group, Inc.
JPMorgan Chase & Co.
). All the 3 banks hold a Zacks Rank #2.
COMERICA INC (CMA): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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