Fifth Third Bancorp. swung to a third-quarter profit as it set aside much less to cover loan losses.
The Cincinatti bank has seen credit metrics improve markedly of late. It suffered during the downturn, as lending to an overheated commercial real estate market weighed on results. Like many regional banks, its bottom line has benefited from lower loan-loss reserves of late.
Loan-loss provisions were $457 million in the latest quarter, down from $952 million from a year earlier but up from $325 million in the second quarter. Net charge-offs, or loans thought not to be collectible, rose to 4.95% of average loans from 3.75% and 2.26%, respectively. Nonperforming assets, though near default, were 2.72%, down from 4.09% and 3.87%.
Fifth Third posted a third-quarter profit of $238 million, or 22 cents a share, compared with a year-earlier loss of $97 million, or 20 cents a share. The results included pretax gains of $127 million and $288 million, respectively.
Revenue edged up 1% to $1.74 billion.
Analysts polled by Thomson Reuters most recently forecast earnings of 17 cents on $1.54 billion in revenue.
Shares closed Wednesday at $12.47.