There was a lot of fear during the early months of the pandemic about certain businesses not being able to service their loans. The most troubled sectors included restaurants, travel businesses, hotels, casinos, and retail establishments. A lot of these sectors depend upon footfalls and people coming out of their homes and going from point A to point B. With airlines cutting flights and lockdown guidelines, the movement of people was almost non-existent. Gradually, as things began to open up again, the fears subsided. Banking stocks were initially among the ones that got hit. However, banks offset the negative sentiment from the loan book side by delivering substantial growth in income from their trading and investment banking divisions. Certain well-known banks like Fifth Third Bancorp had some exposure to the troubled sectors. However, the exposure accounted for a relatively lower percentage of the overall loan book. If you are looking to buy banks stock for 2021, then analyzing such details can help you uncover undervalued banks.
Fifth Third Bancorp Q2 Results Point To Momentum
On 22nd July 2021, Fifth Third Bancorp reported its second-quarter 2021 earnings results. Net interest income available to shareholders was up from $163 million in Q22020 to $674 million. Earnings per share on a diluted basis were also up from $0.23 per share in Q22020 to $0.94. The restaurant loan book stood at $1.6 billion. The casino loan book stood at $1.1 billion. The hotels segment was $1.4 billion, the travel and leisure businesses segment was $0.4 billion, and non-essential retail loans were $1.7 billion. Overall, the high-impact COVID sectors’ total loan book accounted for about 9% of the total loan book of Fifth Third Bancorp. So, the business was quite well-diversified and the bank appeared to be confident of dealing with any contingencies that may arise in the near future. Fifth Third Bancorp is in a strong position and is a possible option for banks stock long term.
Fifth Third Bancorp achieved record results in several departments that are fee-based. These include wealth management and commercial banking. Fifth Third Bancorp is also making investments in its technology infrastructure and also looking to grow its fintech capabilities.