Fifth Third Earnings: Manageable Decline in Net Interest Income Outlook, Shares Still Undervalued

No-moat-rated Fifth Third first-quarter results showed that earnings pressure is building, we view the pressure as being quite manageable. We had already expected that fourth-quarter results would be the peak for profitability during the current rate cycle, and while the drop off from that peak has accelerated a bit more than we expected, it was not that categorically different. As we revise our projections again to make sure we are still being prudent with our through-the-cycle net interest margin, or NIM, estimates (assuming that rates eventually fall from current levels), we do not expect a material change to our current $38 per share fair value estimate for the bank. We believe shares remain undervalued.