Fifth Third Bancorp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Tim, can you share with us your interactions with your commercial customers since obviously the changes in the economic environment and the outlook is very uncertain due to the tariffs? Can you talk to us about how uncertain your clients are? Number one. But number two, can you also play into that are the customers, your commercial customers in a better position today because they went through the pandemic they needed to get lean during the pandemic and the lessons they learned there can be applied today as we go forward in this uncertain environment?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Very good. Yeah. No, no, very helpful. I appreciate all the color. Maybe another -- the follow-up question. We know in this uncertain environment and should the economy slow down further, credit is always a discussion point with all the banks, not just at your organization. But putting that aside for a second, if we stay in this lower growth environment, maybe there is a shallow recession or worse, what are some of the other areas aside from credit that you guys are looking at closely that you can manage to enable you to get through a slowdown more effectively than maybe in the past downturns? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 1:00PM, FITB.OQ - Q1 2025 Fifth Third Bancorp Earnings Call

Question: Ebrahim Poonawala - Bank of America - Analyst : I guess maybe, Tim, sticking with credit, just looking to slide 10. You mentioned, I think, two ABL credits looking at sort of the sequential increase in nonperformers. Just talk to us in terms of, and I'm assuming this has nothing to do with the tariff overhang, but if you can provide some more details on those ABL loans that drove NPLs higher and -- and even if we remain in a slower growth environment, do you see more migration into NPLs, more losses coming through the C&I book based on what you've seen and the work you've done Yeah.

Question: Ebrahim Poonawala - Bank of America - Analyst : That's helpful. And maybe while we have you, Greg, I guess, just also address the solar panel lending business, where things stand there? Any policy risks that you see? I mean it comes up as an idiosyncratic risk factor for Fifth Third from the time. And again, just give us an update on where that stands, both on how you're thinking about growth in that book as well as credit risk. Thanks.

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Either Tim or Bryan, I was hoping you could maybe put a little more context around where you feel like you've got flexibility to cut costs without impairing some of the investments and expansion plans. I know Bryan and both of you talked about costs related to lower revenue activities. So I certainly get to some of that flexes naturally. But just curious for maybe a little more color on how you're thinking about those sorts of dynamics. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 1:00PM, FITB.OQ - Q1 2025 Fifth Third Bancorp Earnings Call

Question: Scott Siefers - Piper Sandler & Co. - Analyst : Okay. Perfect. And then, Tim, I think you may have touched on some of these in your comments about commercial customers a couple of questions ago. But when you think particularly on the capital market side, do you have a sense for how much things are going to need to come down before customers are comfortable re-engaging in sort of discretionary activities? I mean like how much of this do we need to get through before people just sort of resume their more strategic plans?

Question: Mike Mayo - Wells Fargo - Analyst : I feel like I was in a multiverse and one universe, there's a global trade war the Fed chair gives caution and there's $7 trillion of lost stock market value. And my other universe includes Fifth Third and a lot of the other banks. And in your case, you're actually guiding for some better loan growth by 100 basis points this year. You said utilization is better through mid-April. You still guide for record '25 NII. You said that a single client talked about layoffs, you said credit early-stage delinquencies are close to their decade low, and there's no change to your charge-off guide. So as I toggle back and forth between one universe and the other, how do I reconcile that there's not a multiverse here?

Question: Mike Mayo - Wells Fargo - Analyst : I understand you were, I think, the first bank to actually highlight that. And a surprise, more banks didn't follow. In fact, they surprised you didn't even build even more. So I guess with the Chief Credit Officer there, have you done a name-by-name review. And I guess that would be a first order of review, but you don't really know what the second and third order review is. And I'm not sure how anyone can get other arms around this, but how do you manage to do it?

Question: Manan Gosalia - Morgan Stanley - Analyst : Good morning. Tim, thank you for that really detailed response and what you're seeing on the ground. I thought that was really helpful. Just given everything you said, higher inflation, but no layoffs. Can you talk about how you're thinking about the US consumer in general? And how you're thinking about the risks in your own consumer book?

Question: Manan Gosalia - Morgan Stanley - Analyst : I appreciate all the color there. Maybe as a follow-up, just given some of this uncertainty and given the volatility on the long end of the curve, where do you want to manage on that CET1 including AOCI numbers? So I think you noted that you're slowing buybacks versus what you did in the first quarter. And mostly, you're doing the buybacks in the back half of the year, where would you expect to end the year on that marked CET1 ratio?

Question: Ken Usdin - Autonomous Research - Analyst : Tim, I always appreciate your big picture perspective on the industry. And just given the uncertainty you guys mentioned and all the changes happening in the regulatory environment. I'm just wondering any updates you thoughts about just industry consolidation and also what you're expecting to see and what you're hoping for from a Fifth Third perspective from all the changes on the regulatory front?

Question: Ken Usdin - Autonomous Research - Analyst : Tim, anything on the industry consolidation point, and I'll leave it there.

Question: Ken Usdin - Autonomous Research - Analyst : Understood. Okay.

Question: Peter Winter - D.A. Davidson - Analyst : Good morning. You guys have a nice history of being very disciplined on credit underwriting. If I look at slide 18, you've got your breakdown of the shared national credit portfolio, which is 27% of loans. Just in the downturn, there always seems to be market concerns about SNC credits. Just can you talk about your outlook in this portfolio in an economic downturn?

Question: Peter Winter - D.A. Davidson - Analyst : Got it. And just as a follow-up question. You upped the average loan forecast, and you've got very good momentum in the first quarter on that margin expansion, but [didn't change] the NII guidance. Just maybe talk about the puts and takes to the 5% to 6% growth this year and where you think the margin could end the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 1:00PM, FITB.OQ - Q1 2025 Fifth Third Bancorp Earnings Call

Question: Peter Winter - D.A. Davidson - Analyst : Any sense where the margin could end the year?