Fifth Third Bancorp
plunged deeper into the red in the third quarter as accelerating loan losses wiped out big gains from asset sales.
The Cincinnati-based regional bank posted a loss available to common shareholders of $159 million, or 20 cents a share, compared with a loss of $81 million a year ago and second-quarter profit of $856 million. Analysts had expected the bank to report a loss of 17 cents a share, on average, according to Thomson Reuters.
Fifth Third's results benefited from a $288 million pretax gain on the sale of
stock, as well as a $1.8 billion gain from selling its processing business.
However, the bank charged off $756 million worth of loans it doesn't expect to be repaid, while nonperforming loans climbed to 3.75% of Fifth Third's loan book vs. 3.17% the previous quarter. Problems relate largely to the bank's troubled commercial loans, while its consumer assets appear to have started to stabilize.
CEO Kevin Kabat acknowledged that the "credit environment remains challenging" but said he expects lower charge-offs for the fourth quarter as commercial losses stabilize, and predicted that reserve-building will lessen in future quarters.
Written by Lauren Tara LaCapra in New York