Barclays Sees Fee Income Ticking Higher For Fifth Third

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.

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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.

1. "2016 guidance (anything changed?)"
2. "Branch closures (now complete, what's next?)"
3. "Management priorities (can it keep executing against them)"
4. "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.