July 20 (Reuters) - Fifth Third Bancorp on Thursday posted a better-than-expected second-quarter profit, as interest rate hikes by the U.S. central bank boosted its interest income.
On an adjusted basis, the Ohio-based bank earned 87 cents per share, beating analysts' average estimate of 83 cents, according to Refinitiv data.
The bank's shares, down 13% this year, were up 1.2% in premarket trading.
The rigorous rate hike cycle by the Federal Reserve has allowed lenders to boost their interest income by charging higher interest on loans.
Fifth Third's net interest income - the difference between the income from loan interests and payout on deposits - jumped 9% to $1.46 billion.
However, the lender trimmed its full-year NII growth forecast range to 3% to 5%, from 7% to 10%.
Successive rate hikes by the central bank has made borrowing costly, suggesting that consumers might deter from seeking loans, thereby causing a drop in loan demands in the near future.
After a spate of bank runs earlier this year, deposits at banks have now stabilized. Average deposits at Fifth Third Bancorp was $160.86 billion, flat sequentially.
The result trails major U.S. regional banks who saw their shares rise on the back of higher interest income and stabilized deposits after the banking crisis in the previous quarter sparked industry turmoil.
Reporting by Sri Hari N S in Bengaluru; Editing by Maju Samuel
Source: Reuters