Fourth Consecutive Quarter of Positive Operating Leverage Shows Strength
Fifth Third Bancorp’s latest results for Q3 2025 are headlined by the company’s ability to deliver a fourth straight quarter of positive operating leverage. That means revenue is growing faster than expenses—a critical indicator of business momentum for banks, especially in a year marked by rate and economic uncertainty. EPS landed at $0.91 (diluted), up from $0.88 in the previous quarter and $0.78 a year ago, as the company navigated growth opportunities while keeping a tight grip on costs.
Net Interest Margin Expands for the Seventh Consecutive Quarter
Fifth Third posted net interest income (NII) of $1.52 billion (GAAP) in Q3, a 7% year-over-year increase, and the seventh straight quarterly expansion in its net interest margin (NIM), which climbed to 3.13%. NIM expansion reflects both asset repricing and strategic reductions in liability costs, key drivers in this rate environment. Management noted that improvements in earning asset mix and deposit costs fueled a stronger margin despite mixed interest rate dynamics this quarter.
| Q3 2025 | Q2 2025 | Q3 2024 |
|---|---|---|
| Net Interest Income (FTE, $M): $1,525 | $1,500 | $1,427 |
| Net Interest Margin: 3.13% | 3.12% | 2.90% |
Expense Management Supports Improved Efficiency
Fifth Third continues to hold expenses nearly flat, reporting noninterest expense of $1.27 billion—up just 2% year over year. The bank's efficiency ratio, which measures costs relative to revenue, improved meaningfully: adjusted efficiency was 54.1%, a solid 180 basis-point improvement from a year ago, reinforcing management’s expense discipline even as investments in tech and marketing ramp up. Strategic spending contributed to fee revenue growth, notably a 28% quarter-over-quarter rise in capital markets fees.
| Efficiency Ratio (Adj.) | Noninterest Expense ($M) | Capital Markets Fees ($M) |
|---|---|---|
| 54.1% | 1,267 | 115 |
| Q2: 55.2% | 1,264 | 90 |
| Q3 2024: 55.9% | 1,244 | 111 |
Loan and Deposit Trends Signal Sustained Growth
Total average loans and leases grew 6% year-over-year, driven by strength in both commercial and consumer lending. Growth in indirect secured consumer and home equity loans led the way on the consumer side, while commercial loan volumes stayed resilient despite ongoing pressure in the commercial real estate sector. Average deposits were stable sequentially, while demand deposit balances rose for a second quarter in a row—a testament to deposit franchise health.
| Average Loans & Leases ($B) | Average Deposits ($B) | Loan Growth YoY |
|---|---|---|
| 123.3 | 164.8 | +6% |
Noninterest Income Bolstered by Wealth, Capital Markets, and Mortgage
Noninterest income was $781 million for Q3, a 4% rise quarter over quarter and 10% over last year, lifted by growth in wealth and asset management (up 11% YoY), a sharp 28% jump in capital markets fees, and steady improvement in mortgage revenue. These results highlight Fifth Third's efforts to build diversified fee streams outside of core lending activities.
| Segment | Q3 2025 Revenue ($M) | YoY Growth |
|---|---|---|
| Wealth & Asset Mgmt | 181 | +11% |
| Capital Markets | 115 | +4% |
| Mortgage Banking | 58 | +16% |
Credit Quality Remains Solid, Despite Isolated Charge-Offs
Credit metrics are holding up well even as a one-time asset-backed finance charge-off pushed the net charge-off ratio (NCO) to 1.09% from 0.45% last quarter. Excluding this credit, NCO was 0.52%, roughly in line with peer performance. The allowance for credit losses as a percentage of loans was 1.96%, consistent with prior periods. Importantly, nonperforming loan and asset ratios improved quarter over quarter, suggesting portfolio health is steady in a changing macro environment.
| Metric | Q3 2025 | Q2 2025 | Q3 2024 |
|---|---|---|---|
| Net Charge-off Ratio | 1.09% | 0.45% | 0.48% |
| NPL Ratio | 0.62% | 0.70% | 0.59% |
| ACL as % of Loans | 1.96% | 2.09% | 2.09% |
Capital and Book Value Growth Supports Capital Returns
The bank’s CET1 capital ratio remains robust at 10.54%. Book value per share rose to $29.26, and tangible book value per share increased by 7% year over year—among the strongest showings for large regionals. Fifth Third returned $300 million to shareholders via repurchases this quarter and boosted its dividend by 8% to $0.40 per share. The ability to grow tangible capital and sustain capital return is a marker of underlying profitability and balance sheet discipline.
| Capital Ratio | Q3 2025 | Q2 2025 | Q3 2024 |
|---|---|---|---|
| CET1 Ratio | 10.54% | 10.58% | 10.75% |
| Tangible Book Value/Share | $21.66 | $20.98 | $20.20 |
What to Watch Next
With a four-quarter streak of positive operating leverage and healthy growth in both loans and fee income, Fifth Third Bancorp is demonstrating it can execute on stability, profitability, and growth—even with industry-wide challenges around credit costs and deposit competition. If expense discipline and diverse fee momentum hold, the setup remains constructive. Investors may want to pay particular attention to upcoming trends in commercial credit, continued margin dynamics, and capital management moves as Fifth Third enters the next leg of the cycle.
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