Fifth Third Bancorp · NASDAQ:FITB
Fifth Third Bancorp — Morgan Stanley 2022 US Financials, Payments & CRE Conference
37 slides from Fifth Third Bancorp's conference presentation, Jun 14, 2022
Slide 1: Morgan Stanley 2022 US Financials, Payments & CRE Conference
1 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Morgan Stanley 2022 US Financials, Payments & CRE Conference Tim Spence President June 15, 2022
Slide 2: Cautionary statement
2 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Cautionary statement This presentation contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and
Slide 3: Living our purpose guided by our vision and values
3 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Living our purpose guided by our vision and values Our Vision Be the One Bank people most value and trust Our Core Values Our Purpose To improve the lives of our customers and the well-being of our communities Work as One Bank
Slide 4: Top tier retail satisfaction position among peers
4 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Apple app store rating2 Top tier retail satisfaction position among peers 1One of the nation’s leading consumer research 2022 annual studies; Trillionaires is an average of BAC, C, JPM, WFC; 2As of May 5, 2022; Mobile banking
Slide 5: Key messages
5 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Key messages Growing households through digital product innovation Delivering strong financial results while investing for long-term outperformance 1 2 3 4 Balance sheet management focused on through-the-cycle performance Rece
Slide 6: Expanding presence to take market share in high growth Southeast metro areas
6 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 64% 14% 22% Midwest ex. Chicago Chicago Southeast Expanding presence to take market share in high growth Southeast metro areas Key Southeast MSAs of focus Represents a FITB Southeast retail market for 10+ years Well-positioned
Slide 7: Leadership position in manufacturing lending
7 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 7% 11% 11% 12% 15% 16% 17% 22% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 X Strategically positioned to win as firms strengthen supply chains, onshore production for the US market Major rail freight hub Leadership positi
Slide 8: Growing households through digital product innovation
8 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Growing households through digital product innovation • Launched in 2021, Fifth Third’s Momentum Banking consumer product suite is unparalleled among peers • Offering combines the best of fintechs and traditional banks (Early
Slide 9: FinTech acquisition of Provide accelerates SME growth
9 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved FinTech acquisition of Provide accelerates SME growth Overview • Provide is the leading fintech in the healthcare practice finance segment • Digital capabilities delivers best-in-class experience and speed to close • 3+ year r
Slide 10: FinTech acquisition of Dividend Finance provides entry to consumer point-of-sale financing
10 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved FinTech acquisition of Dividend Finance provides an entry point to high growth consumer point-of-sale financing • Founded in 2013 and headquartered in San Francisco, Dividend Finance is a national tech-enabled point-of-sale f
Slide 11: Expect to generate strong loan growth while maintaining credit underwriting standards
11 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Expect to generate strong loan growth while maintaining credit underwriting standards Full year 2022 loan growth drivers1 ~4% ~2% ~2% ~(2%) New client acquisition All other Consumer (incl. GNMA) Line utilization increase Auto
Slide 12: Balance sheet management focused on long-term outperformance
12 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Balance sheet management focused on long-term outperformance Asset sensitive, with continued focus on hedging risks over the long-term Prudent deployment of excess liquidity to generate long-term value Disciplined credit unde
Slide 13: What you should expect from Fifth Third
13 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved What you should expect from Fifth Third Prudent balance sheet management (credit risk, rate risk, capital) focused on through-the-cycle outperformance Continued ability to grow organically in all businesses Leverage non-bank
Slide 14: Appendix
14 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Appendix
Slide 15: Second quarter 2022 expectations compared to first quarter 2022
15 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Second quarter 2022 expectations compared to first quarter 2022 Net interest income1 Noninterest income1 Noninterest expense1 down 3 – 4% (1Q22 baseline: $709MM) (1Q22 baseline: $1.222BN) (including HFS) Avg. Loans & leases c
Slide 16: Consumer portfolio remains resilient
16 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Consumer portfolio remains resilient >80% of total consumer portfolio loans consists of homeowners 94% of residential mortgage loan portfolio is fixed rate 4% 22% 18% 56% 3% 18% 16% 63% Portfolio focused on prime and super pr
Slide 17: Disciplined credit underwriting and client selection throughout the bank
17 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved • Prime and super prime focus; WA portfolio FICO of 765 • ~90% of total portfolio secured • 18 bps year-over-year decline in 90 days past due as a % of loans • Expect indirect auto and specialty originations of ~$7BN in 2022,
Slide 18: Treasury management solutions delivering client insights, automation and efficiency
18 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved • ~9,500 TM clients; TM relationships with 31 of Fortune 100 companies • Fifth Third has a #2-8 market share rank for most TM products • ~1/3 of TM business consists of Managed Services, which continues to grow at a significa
Slide 19: Diversified commercial loan portfolios
19 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 18% 12% 11% 7% 7% 6% 5% 5% 4% 4% 3% 2% 2% 14% Metal Transportation equipment Chemical Food Machinery Computer & Electronic Plastics & Rubber Beverage & tobacco Paper Electrical equipment Furniture & related Nonmetallic minera
Slide 20: Commercial revolver rates by portfolio
20 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $11 $16 $13 $11 $11 $11 $11 $11 $13 $14 $14 35% 52% 40% 35% 34% 32% 32% 31% 33% 36% 37% 0 2 4 6 8 10 12 14 16 18 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 May 22 Commercial utilization rate $27 $35 $28 $25 $24 $23 $24
Slide 21: Specialized industry verticals generate distinctive financial results and risk management
21 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 2015 1Q22 Specialized industry verticals generate distinctive financial results and risk management Healthcare ~$4.1B Energy (incl. Renewables) ~$3.9B Entertainment, Lodging and Leisure ~$1.8B Retail ~$4.9B Technology Media T
Slide 22: Focused on growing middle market relationships to improve profitability
22 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Midwest ex. Chicago Southeast Chicago Expansion marketsTotal middle market 2020 2021 2022E Focused on growing middle market relationships to improve profitability with strong credit quality Go to market strategy • Strong loca
Slide 23: Expanding capital markets capabilities to create value for our clients
23 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 56% 92% Financial Risk Management (FRM) Strategic Advisory & Investment Banking (incl. M&A) Expanding capital markets capabilities to create value for our clients Growing fees across the Capital Markets business Institutional
Slide 24: Stable core deposit funded balance sheet
24 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 0.04% Peer 10 Peer 9 Peer 8 Peer 7 Peer 6 Peer 5 Peer 4 Peer 3 FITB Peer 2 Peer 1 56% 36% 8% Branch Banking Commercial Banking Wealth & Asset Management 92% 91% 91% 82% 75% 71% 72% 71% 70% 69% 70% 60% 70% 80% 90% 100% 3Q19 1Q
Slide 25: Cash flow hedges continue to protect NIM
25 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $10 4Q29 $12 $12 $12 $12 $11 $11 $11 $7 $7 $6 $5 $5 $1 $1 $1 $5 $5 $6 $7 $10 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 $15 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Floors
Slide 26: Balance sheet positioning as of 3/31/22
26 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 0% 100% Fix | 0% Variable 80% Fix | 20% Variable Balance sheet positioning as of 3/31/22 Investment portfolio $26.0BN fixed 3 | $46.3BN variable 1,2 Commercial loans1,2,3 Consumer loans1 Long-term debt4 $36.2BN fixed | $6.7BN
Slide 27: Well positioned to benefit from higher rates
27 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Well positioned to benefit from higher rates Estimated NII sensitivity profile and ALCO policy limits Estimated NII sensitivity with demand deposit balance changes Estimated NII sensitivity with deposit beta changes NII is as
Slide 28: Commercial & industrial overview
28 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 36.2% 47.1% 37.6% 33.4% 31.8% 31.2% 31.3% 31.1% 33.4% 35.5% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 $49.6 $48.8 $47.8 $49.6 $52.6 $49.1 $47.6 $47.8 $51.7 $53.9 $5.2 $4.8 $3.1 $1.8 $1.0$5.4 $3.7 $2.3 $1.3 $0.7 $0.0 $
Slide 29: Commercial real estate overview
29 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Non-Owner Occupied 54% Owner Occupied 46% Multifamily 29% Home Builder 19% Office 10% Hospitality 9% Retail 5% Industrial 9% Other 19% $10.5 $10.5 $10.3 $10.2 $10.5$10.5 $10.3 $10.3 $10.3 $10.7 $6.0 $6.0 $5.7 $5.3 $5.4 $6.2 $
Slide 30: Residential mortgage overview
30 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $15.8 $15.9 $16.2 $16.2 $16.5 $15.8 $16.1 $16.2 $16.4 $17.1 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 4Q21 1Q22 NCO ratio1 (0.01%) (0.06%) (0.02%) 30-89 Delinquencies 0.11% 0.12% 0.09% 90+ Delinquencies 0.46% 0.44% 0.08% Nonperforming Lo
Slide 31: Home equity overview
31 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $5.0 $4.7 $4.4 $4.2 $4.0 $4.8 $4.5 $4.3 $4.1 $3.9 1Q21 2Q21 3Q21 4Q21 1Q22 2% 18% 16% 64% Home equity overview Portfolio loans Key statistics 1Q21 4Q21 1Q22 NCO ratio1 0.01% (0.18%) (0.07%) 30-89 Delinquencies 0.46% 0.61% 0.6
Slide 32: Indirect secured consumer overview
32 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $14.0 $14.7 $15.6 $16.3 $17.1 $14.3 $15.2 $16.0 $16.8 $17.4 1Q21 2Q21 3Q21 4Q21 1Q22 Indirect secured consumer overview Portfolio loans $ in billions 5.1% 5.4% 6.0% 4.8% 4.8% Average QoQ change 2% 22% 16% 60% 1Q21 4Q21 1Q22 N
Slide 33: Credit card overview
33 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved $1.9 $1.8 $1.7 $1.7 $1.7 $1.8 $1.8 $1.7 $1.8 $1.7 1Q21 2Q21 3Q21 4Q21 1Q22 Credit card overview Portfolio loans $ in billions (8.0%) (5.8%) (1.2%) (0.5%) (2.8%) Average QoQ change 5% 29% 20% 46% Key statistics 1Q21 4Q21 1Q22
Slide 34: Technology modernization and spend composition
34 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved Data Center Modernization Infrastructure Platforms Products & Capabilities Select tech partners Enterprise Data Optimization Network, Infrastructure and Application Resiliency TM Cash Management - Expert AR Mobile Modernizati
Slide 35: Digital channel usage and engagement
35 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved 1.1 1.4 1Q21 1Q22 2.7 2.9 1Q21 1Q22 +5% Year-over year growth Digital channel usage and engagement Active digital banking users Digital sales (includes deposits, card, & loans) +31% Year-over year growth 1Q21 1Q22 2x growth M
Slide 36: A recognized ESG leader among peers
36 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved A recognized ESG leader among peers Recent actions Third-party recognitions Aligned executive compensation to ESG topics ESG Funding Modifier added to 2022 Variable Compensation Plan Established sustainability office Leading
Slide 37: ESG priorities and metrics
37 Classification: Internal Use© Fifth Third Banc rp | All Rights Reserved ESG priorities and metrics Addressing climate change Promoting inclusion and diversity Demonstrating our commitment to employees Strengthening our communities Keeping the customer at the center $180MM Neighborhood Investment
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