Profits at Fifth Third Bancorp in Cincinnati rose in the second quarter as lower costs and higher interest rates offset a decline in lending.

The $141 billion-asset company reported earnings of $344 million, or 13% more than a year earlier. Earnings per share were 45 cents, or two cents higher than the consensus among analysts’ estimates compiled by FactSet Research Systems.

Good news, bad news
Though it posted a double-digit increase in profits in 2Q, Fifth Third also reported a 5% decline in C&I loans.

Noninterest expenses fell 3% to $957 million. The declines occurred almost across the board; lower salaries, occupancy and technology-related expenses were among the contributors.

The recent hikes in short-term interest rates also boosted profits, pushing up the net interest margin by 13 basis points to 3.01%. Net interest income rose 4%, to $945 million.

Average loans, however, dipped 2% to $91.9 million thanks in part to a 5% decline in commercial and industrial lending. Certain types of consumer loans — including credit cards and auto loans — also declined.

Fee-based income fell 6%, to $564 million on lower corporate and mortgage revenue as well as other factors.

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.