Fifth Third Bancorp of Cincinnati slashed its quarterly dividend this week, citing its uncertainty about the direction of the economy.
The $116 billion-asset company cut its dividend 93.3%, to a penny. It said it expects the move to save about $300 million in capital next year.
Kevin Kabat, the company's chairman, president, and chief executive, said in a press release issued late Tuesday that "Fifth Third and the banking industry are currently operating in a very difficult environment, particularly related to trends in economic activity and employment levels. It is not currently clear when those trends will begin to improve but we do not expect improvement in the near term." The dividend is payable Jan. 22 to shareholders of record on Dec. 31.
The company has already cut its dividend this year. In June it slashed its quarterly payout by nearly two-thirds, to 15 cents.
Fifth Third is eligible to sell $3.46 billion of preferred stock to the Treasury Department under the capital purchase program; shareholders will vote Dec. 29 on the stock sale.