Fifth Third 2Q profit falls 29 percent

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CINCINNATI (AP) — Fifth Third Bancorp's second-quarter profit slid 29 percent with the housing sector still in a funk, but the results topped Wall Street expectations.

CEO Kevin Kabat told analysts in a conference call that although housing activity was more sluggish than expected, the improving U.S. employment picture should help.

Net income fell to $416 million, or 49 cents per share, from $582 million, or 65 cents per share, in the same quarter a year ago.

Analysts were expecting per-share earnings of 45 cents per share, according to a survey by Zacks Investment Research.

Still, shares closed Thursday at $20.28, down $1.27 or almost 5.9 percent. Edward Jones bank analyst Shannon Stemm attributed the decline in shares mostly to concern over weak mortgage activity.

"The housing market hasn't rebounded as they expected, and they are guiding their fee income to be lower than what they said last quarter as mortgage-banking revenue declines," Stemm said.

On Thursday, the Commerce Department reported that home construction fell in June to the slowest pace in nine months. Sales of new homes are still running at just about half the pace of a healthy real estate market.

Severe weather, rising home prices and mortgage rates, as well as tighter lending standards, have all contributed to a slowdown.

"Overall, I'm pleased with our results this quarter," Kabat said. "We remain focused on the things we can control to differentiate results — lending and deposit generation, business execution and disciplined expense management."

Revenue for the Cincinnati regional bank fell 16 percent to $1.64 billion, from $1.95 billion last year. That was better than the $1.53 billion that Wall Street was looking for.

Earnings from deposits and loans, or net interest income, rose 2 percent to $905 million. Earnings from fees and other charges, or noninterest income, fell 31 percent to $736 million.

Fifth Third operates more than 1,300 banking centers in 12 states: Ohio, Kentucky, Indiana, Michigan, Illinois, Pennsylvania, Missouri, Florida, Georgia, North Carolina, Tennessee, and West Virginia.

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