Fifth Third profit jumps on fee income, records $178 million loss from Tricolor bankruptcy

(Reuters) -U.S. regional bank Fifth Third Bancorp reported a 14% jump in third-quarter profit on Friday on the back of robust fee income, but booked a $178 million loss related to the bankruptcy of auto dealer Tricolor.   Broad-based growth across Fifth Third's fee businesses lifted non-interest income to $781 million in the quarter, up 10% from a year earlier.   Wealth management and asset management fee revenue surged 11%, while mortgage banking fee revenue jumped 16%. Shares of the bank were up 1% in early afternoon trading. The stock had fallen 4.5% this year as of Thursday's close.    TRICOLOR LOSS While the broader U.S. economy has remained resilient, fears about credit quality at some regional banks, including Zions Bancorporation and Western Alliance, triggered a fall in U.S. bank stocks on Thursday. Fifth Third had disclosed last month it gave a $200 million asset-backed finance loan to Tricolor, which filed for bankruptcy last month and moved to liquidate its business. "We decided to disclose the potential loss as quickly as possible", Fifth Third CEO Tim Spence said in a phone interview. He said the bank is comfortable with its risk after a portfolio review and noted that profits increased even after the losses. Net charge-offs, or debts that are unlikely to be recovered, totaled $339 million in the quarter, including a $178 million loss related to the impairment of the loan to Tricolor.  INTEREST INCOME GROWTH Net interest income — the difference between what banks earn on loans and pay on deposits — rose 7% to $1.53 billion in the quarter, thanks to lower deposit costs and fixed-rate asset repricing. Earlier this month, Fifth Third struck a $10.9 billion all-stock deal to buy regional lender Comerica, the biggest U.S. bank transaction this year which will create the nation's ninth-largest lender. Spence said he expects the deal to close in the first quarter of 2026 and the integration to start generating savings in 2027. Fifth Third is now focused on the consolidation process and not looking for another deal, the CEO added. Fifth Third's profit jumped to $608 million, or 91 cents per share, in the three months ended September 30, compared with $532 million, or 78 cents per share, a year earlier.  (Reporting by Arasu Kannagi Basil in Bengaluru, additional reporting by Tatiana Bautzer in New York; Editing by Sahal Muhammed and Cynthia Osterman)

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