Dallas, Texas 07/24/2015 (FINANCIALSTRENDS) – Fifth Third Bancorp (NASDAQ:FITB) profit dropped to $315 million from $439 million as the bank took a hit from ongoing closures of some of its branches. Per-share profit as a result of the closures slid to 36 cents from 49 cents as of last year, with revenue coming in at $1.45 billion representing a 12% decline. Earnings fell short of analysts’ expectations as the Street was expecting earnings of 38 cents a share on revenues of $1.5 billion.
Impact of Branch Closures
Fifth Third Bancorp (NASDAQ:FITB) has already admitted to its earnings taking a hit of 7 cents on the branch closures that resulted in one-time charges. The bank plans to sell about 100 branches and, as a result, achieve $60 million in annual cost savings. Non-interest income was down by 24% on the branch closure charge as net interest income fell by 1%.
The closure of the branches will see Fifth Third Bancorp (NASDAQ:FITB) spend a lot on technology as it tries to improve its operational efficiency. Spending on technologies is geared towards addressing the needs of customers who are calling for solutions that allow them to bank anywhere and at any time.
Growth in Mortgage Banking
The bank has also raised its net interest margin from 2.86% to $2.90% as it continues to generate substantial growth in its commercial business. The metric measures the profitability levels of banks after it failed in the recent past on the ongoing low-interest rates environment.
CEO Kevin Kabat on posting the results reiterated that strategic and tactical decisions implemented over the past year were slowly paying off. The main focus at the moment according to the executive is trying to generate more revenues at the back of balance sheet management in the current low-interest rate environment.
The highlight of Fifth Third Bancorp (NASDAQ:FITB) earnings was earnings from mortgage banking rising by 50% to $117 million as average total loans grew by 2%.