When interest rates go down, sectors like housing tend to do quite well. It becomes cheaper to borrow money and purchase a home. So, the demand tends to rise as interest rates hit record lows. On the opposite end, when interest rates rise, financial stocks tend to do well. The best bank shares to buy for the long term start outperforming when interest rates rise. Banks earn income from the spread between the cost of borrowing funds and the rates at which it lends out that money to consumers and businesses. So, a higher interest rate is a good thing for banks. No one can really predict which way interest rates will go. Just ask Warren Buffet, even he thinks that interest rates are the big wild card in investing. However, there are currently indications that inflation will remain high, and that situation could force the Fed to raise rates.
Fifth Third Bancorp Reports Q12021 Earnings
On 20th April 2021, Fifth Third Bancorp reported its first-quarter 2021 earnings results. Net interest income was down from $1.23 billion in Q12020 to $1.17 billion. Non-interest income, on the other hand, was up from $671 million in Q12020 to $749 million in Q12021. Net income for Fifth Third Bancorp came in at $694 million as compared with $46 million in Q12020. Greg Carmichael, CEO of Fifth Third Bancorp, said, “These strong results reflect record commercial banking fee revenue, continued success generating consumer household growth and a strong underlying net interest margin.” Fifth Third Bancorp is one of the largest banks in the US and a dominant player in the Midwest. If you are looking for a long term bank stock, then Fifth Third Bancorp could be worth exploring further.
Fifth Third Bancorp’s stock closed at $39.54 on 14t June 2021. The stock was trading at a 2.73% dividend yield at the time. Its 52-week high was $43.06, while its 52-week low was $17.28.