Wall Street expects earnings of $0.38 a share on revenue of $1.52 billion. Barclays expects second-quarter EPS of $0.39, which includes an $11 million gain from the sale of its Pittsburgh branches offset by a $10 million charge for retirement eligibility changes.
"We expect stable net interest income with modest balance sheet growth offset by net interest margin compression," analyst Jason Goldberg wrote in a note.
Goldberg projects sequentially higher fee income, as the analyst looks for an uptick in mortgage banking, advisory revenues and corporate banking after a challenged first quarter.
"Now that FITB has completed its branch closure strategic initiative (107 branch divestures resulting in $60 million in saving), we look to see what FITB can do next to grind its expense run-rate lower and get closer to positive operating leverage," Goldberg highlighted.
In addition, the analyst expects a modest decline in Fifth Third's loan loss provision, though continued reserve building.
Sequentially, the analyst expects results to evidence a flat NII as a higher balance sheet is offset by pressured NIM (-4bps), higher fee income, higher expenses, a lower loan loss and a reduced average share count.
On the M&A front, the company has made it clear that it has no interest in a full-bank deal. But, since the company has expressed interest in a non-bank deal (payments, wealth management and insurance spaces), Goldberg look to see "if this M&A rhetoric continues."
Goldberg noted key factors to watch when Fifth Third will release its second quarter results on July 28.
- "2016 guidance (anything changed?)"
- "Branch closures (now complete, what's next?)"
- "Management priorities (can it keep executing against them)"
- "Vantiv Inc VNTV (when is it reducing the rest of its stake?)"
At time of writing, shares of Fifth Third were up 2.18 percent on the day to $17.32. Goldberg has a $21 price target on FITB stock.
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