Fifth Third Bancorp reported a higher fourth-quarter profit as benefits associated with the tax law and recent interest rate hikes offset declines in the Cincinnati company’s loan book.
Profit at the $142 billion-asset company rose 29% from a year earlier, to $509 million. Earnings per share were 67 cents, or 16 cents higher than consensus estimates of analysts compiled by FactSet Research Systems.
The results were boosted by one-time accounting adjustments from the tax law, including a $220 million benefit from the revaluation of the company’s deferred tax liability. The law, signed by President Trump in December, cut corporate rates to 21% from 35%.
“In addition to the immediate positive impact of lower corporate taxes on our company’s results, we are optimistic that the new tax law will help to reinvigorate the economy and support further growth in our businesses,” CEO Greg Carmichael said in a press release Tuesday.
Net interest income climbed 6%, to $963 million. The net interest margin jumped 16 basis points, to 3.02%. Total loans fell 1% to $92.3 billion, as gains in commercial construction offset ongoing declines in business, home equity and auto lending.
Fee-based income slid 7%, to $577 million, largely from a 24% decline in corporate banking revenue, which the company attributed to a lease remarketing impairment.
Noninterest expenses rose 12%, to $1.1 billion on higher compensation, due in part to the company’s announcement last month that it would provide one-time to bonuses to employees thanks to the tax cut. Increases in technology and communications expenses also contributed to the higher costs.