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Fifth Third is cautious despite signs of soft landing; CET1 increases
By Devika Patel
Knoxville, Tenn., Oct. 20 – Fifth Third Bancorp expects the economy to have a soft landing but is still operating with caution due to some economic indicators appearing misleading.
“With respect to the economy, while aggregate figures on spending and employment remain strong and market sentiment has shifted more in favor of a soft landing, we continue to be more cautious given concerning signals disguised beneath the aggregates,” president and chief executive officer Timothy N. Spence said on the company’s third quarter ended Sept. 30 earnings conference call on Thursday.
“For example, while the most recent headline payroll numbers were strong, most, if not all, of the job growth is a byproduct of more people working part-time jobs.
“Real average weekly earnings slipped every month during the quarter and the lower end of the consumer spectrum now maintains deposit balances below pre-Covid levels,” Spence said.
As of Sept. 30, the CET1 capital ratio was 9.8%. CET1 capital increased 31 basis points sequentially during the quarter and is expected to keep increasing along with liquidity.
“We created over 30 bps of CET1 capital during the quarter, reflecting our strong earnings power,” Spence said.
“Our CET1 ratio increased 31 bps sequentially ending the quarter at 9.8%,” executive vice president and chief financial officer James C. Leonard said on the call.
“Our capital position reflects our ability to build capital quickly through our strong earnings generation.
“Looking forward, we expect to build capital at an accelerated pace.
“We anticipate accreting capital such that our CET1 ratio ends this year above 10%.
“We have been aggressive in building liquidity,” Leonard said.
Fifth Third is a diversified financial services company based in Cincinnati.
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