DBRS, Inc. (Morningstar DBRS) upgraded the credit ratings of Fifth Third Bancorp (Fifth Third or the Company), including the Long-Term Issuer Rating to A (high) from 'A.'
At the same time, Morningstar DBRS upgraded the long-term credit ratings of its subsidiary, Fifth Third Bank (the Bank) including the Long-Term Issuer Rating to AA (low) from A (high). The trend on all credit ratings is now Stable. The Intrinsic Assessment (IA) for the Bank was raised to aa (low), while the Support Assessment is SA1, reflecting the expectation of internal support provided by the Company. The Company's Support Assessment is SA3, meaning that timely systemic support is not expected. Fifth Third's Long-Term Issuer Rating is positioned one notch below the Bank's IA.
KEY CREDIT RATING CONSIDERATIONS
The credit rating upgrade reflects Fifth Third's high-performing franchise, which was strengthened following the February 2026 acquisition of Comerica, meaningfully expanding the Company's presence in attractive Southwest markets and enhancing geographic diversification. The combined organization benefits from a broader customer base, increased scale, and a greater capacity to generate stable earnings. Earnings performance remains solid, underpinned by a balanced business mix that includes a substantial contribution from fee-based revenue, disciplined expense management, and resilient net interest income generation. Additionally, the Bank maintains sound asset quality, prudent underwriting standards, and strong liquidity positions, supporting its ability to navigate varying economic environments while executing on integration objectives.
The credit ratings also reflect the expectation of a successful September 2026 systems conversion of the Comerica acquisition. Furthermore, the credit ratings consider the potential impact of a weaker economic environment and market uncertainty, although these risks are mitigated by Fifth Third's diversified franchise and sound risk profile.
The Company's IA of aa (low) has been assigned at the midpoint of the IA Range, as Morningstar DBRS views Fifth Third's credit fundamentals and performance as commensurate with those of similarly rated peers.
CREDIT RATING DRIVERS
Fifth Third's credit ratings would be upgraded if it continues to meaningfully grow its franchise while maintaining better-than-peer financial performance and solid asset quality metrics. Conversely, a downgrade of credit ratings would arise from acquisition integration missteps, a sustained decline in profitability levels, or a significant deterioration in capital or asset quality.
CREDIT RATING RATIONALE
Franchise Combined Building Block Assessment: Strong
Following the acquisition of Comerica in February 2026, Fifth Third has significantly enhanced its franchise strength, scale, and geographic diversification. As of June 30, 2026, the Company had $300 billion in assets, $179 billion in loans, and $234 billion in deposits. The acquisition expanded the Company's commercial banking platform and presence in attractive growth markets, particularly Texas, California, and other Southwestern markets. The combined company now operates approximately 1,500 banking centers across 15 states and benefits from a more diversified earnings and deposit base. Morningstar DBRS views Fifth Third's franchise as increasingly differentiated among regional banking peers because of its combination of strong commercial banking capabilities, sizable payments franchise, and growing wealth management business. Commercial Payments remains a key competitive strength, with approximately $18 trillion of payments volume processed in 2025. Additionally, the Company's expansion strategy in the Southeast and Southwest provides opportunities for continued franchise growth in faster-growing markets while reducing reliance on its traditional Midwest footprint.
Earnings Combined Building Block Assessment: Strong/Good
Fifth Third's earnings generation remains solid and compares favorably with similarly rated peers. The Company reported adjusted net income of $976 million in Q2 2026, with results benefiting from both organic growth and the addition of Comerica. Total revenue increased 16% sequentially, driven by growth in both net interest income and fee income. The Company continues to benefit from a diversified revenue profile, with fee-based businesses generating approximately one-third of total revenue over the last 12 months ended Q2 2026. Strong contributions from Commercial Payments, Wealth & Asset Management, and other fee businesses provide stability through varying economic and interest rate environments. Profitability metrics remain strong, with adjusted return on average assets (ROAA) of 1.31% and adjusted return on average equity (ROAE) of 11.7% in Q2 2026. Morningstar DBRS also notes the Company's demonstrated expense discipline and expected realization of merger synergies, which support management's long-term profitability targets.
Risk Combined Building Block Assessment: Strong
Risk remains well controlled, underpinned by a conservative credit culture, strong oversight, and a diversified balance sheet. Management has improved portfolio granularity across consumer, small business, and middle market lending while maintaining solid credit performance and manageable concentrations relative to peers. Fifth Third reported a net charge-off ratio of 0.30% in Q2 2026, below their 10-year average. Current NPLs are in line with averages at 0.58% and the ACL ratio is high, covering NPLs over 300%. Morningstar DBRS views Fifth Third's risk profile as sound, supported by disciplined underwriting practices, diversified loan exposures, and resilient credit performance. While the Comerica acquisition increased the commercial orientation of the loan portfolio, overall risk metrics remain consistent with the current rating level.
Funding and Liquidity Combined Building Block Assessment: Strong
Fifth Third maintains a strong funding and liquidity profile supported by a substantial core deposit franchise, conservative balance sheet management, and significant available liquidity resources. As of June 30, 2026, core deposits totaled $228.5 billion, resulting in a favorable loan-to-core deposit ratio of 77%. Deposit funding remains well diversified, with a meaningful proportion of noninterest-bearing deposits (28% of total deposits) reflecting the strength of the Company's commercial banking relationships. The Company has limited reliance on brokered deposits and maintains a conservative wholesale funding profile. Liquidity resources remain robust. As of June 30, 2026, Fifth Third held $24 billion in cash and short-term investments and had access to $141 billion of available liquidity through unpledged securities and borrowing capacity at both the Federal Home Loan Bank and Federal Reserve.
Capitalization Combined Building Block Assessment: Good
Fifth Third's capital position is sound supported by strong earnings generation. Following the Comerica acquisition, capital levels have declined from a CET1 of 10.8% at year-end 2025 to 9.9% as of Q2 2026. When adjusted for AOCI, the CET1 ratio further declines to 8.7%. Although capital ratios are lower than those of certain similarly rated peers, they remain comfortably above regulatory well-capitalized thresholds and are consistent with management's stated operating target range of 9% to 10%. The Company continues to maintain a balanced capital management framework, including a quarterly common dividend that represents approximately a 40% payout ratio. While share repurchases have been paused during the integration period, management has indicated an intention to resume buybacks in the second half of 2026.
Further details on the Scorecard Indicators and Building Block Assessments can be found at: https://dbrs.morningstar.com/research/486824
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (July 20, 2026), https://dbrs.morningstar.com/research/485522.
Notes:
All figures are in U.S. dollars unless otherwise noted.
The principal methodology is the Global Methodology for Rating Banks and Banking Organizations (July 6, 2026), https://dbrs.morningstar.com/research/484670. In addition, Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (July 20, 2026; https://dbrs.morningstar.com/research/485522) in its consideration of ESG factors.
The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.
The primary sources of information used for these credit ratings include Morningstar, Inc. and Company documents. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings was of satisfactory quality.
The credit ratings were initiated at the request of the rated entity.
The rated entity or its related entities did participate in the credit rating process for these credit rating actions.
Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.
These are solicited credit ratings.
For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' trends and credit ratings are under regular surveillance.
For more information on this credit or on this industry, visit https://dbrs.morningstar.com.
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