Higher compensation and credit costs drove down quarterly profits at Fifth Third Bancorp in Cincinnati, offsetting revenue gains.
The $142 billion-asset company earned $327 million, or 9% less than a year earlier. Earnings per share were 40 cents, beating an estimate of analysts polled by Bloomberg by five cents.
Salary costs drove profits lower. Noninterest expenses increased 7% to $986 million as the company added staff and began an employee-buyout program.
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Since replacing Kevin Kabat in November, Greg Carmichael has said that the Cincinnati company needs to invest more heavily in technology and compliance now in order to boost profits and improve efficiency down the road. But investors worry that expenses will grow faster than revenues and further squeeze margins.
April 18 -
Marsha Williams' appointment at the $141 billion-asset company takes effect immediately. Williams has been on Fifth Third's board since 2008.
April 11 -
Fifth Third Bancorp has confirmed that it offered some of its employees buyouts to reduce costs.
April 7
Fifth Third also boosted its set-aside for bad loans. The provision for credit losses jumped 72% to $119 million because of ongoing deterioration in its energy book.
Net interest income rose 7% to $909 million, while loans grew 3% to $94 billion. The net interest margin expanded 5 basis points to 2.91%.
Fee-based revenue edged up 1% to $637 million.
