NOTE: On May 27, 2014, the press release was revised as follows: In the debt list, for issuer Fifth Third Bancorp, added (hyb) indicator to affirmed ratings for the US$1107.5M Pref. Stock Non-cumulative Preferred Stock, US$600M Pref. Stock Non-cumulative Preferred Stock and US$450M Pref. Stock Non-cumulative Preferred Stock. Revised release follows.
New York, May 15, 2014 -- Moody's Investor Service affirmed the ratings of Fifth Third Bancorp
(FITB) and its lead bank subsidiary, Fifth Third Bank. FITB's
senior unsecured and long-term issuer ratings of Baa1 were affirmed.
The following ratings of the bank were affirmed: C for bank financial
strength rating; A3 for long-term deposit, senior unsecured,
other long-term obligation and long-term issuer ratings;
and Prime-2 for short-term deposit and other short-term
senior obligation ratings. The standalone baseline credit assessment
of a3 remains unchanged. The outlook is stable.
RATINGS RATIONALE
The affirmation of FITB's ratings was based on Moody's view
that it remains appropriately positioned at the median of the US bank
rating distribution. FITB's strengths include a sound capital
position, comparable profitability trends and good generation of
fee income making it less reliant on net-interest income relative
to same-rated peers. Moody's added that FITB's
liquidity profile is also improving. These strengths offset its
major credit weakness, which is asset quality. Although asset
quality metrics have improved since 2009, non-performing
asset levels remain high because it still holds problematic assets related
to the financial crisis in the challenging states of Florida and Michigan.
Nevertheless, Moody's expects FITB's capital position
would remain resilient in a more stressful environment, a conclusion
also reached by the Federal Reserve in its recent stress test.
FITB's profitability ratios are comparable to those of same-rated
peers in the 2011-13 period when adjusting for gains and income
related to the ongoing disposition of Vantiv, Inc. (formerly
Fifth Third Processing Solutions). The company has a more diversified
revenue mix than the majority of its A3 rated peers with a higher proportion
of non-interest income to total net revenues (43% on average
excluding Vantiv-related income in the 2009-13 period).
However, the bank faces earnings challenges related to the protracted
low interest rate environment, lower mortgage banking volume,
and increased competition in commercial and industrial (C&I) and auto
lending.
FITB's liquidity profile has improved as it has continued its shift
from wholesale debt to core deposit funding. Its core deposit/average
gross loans ratio increased throughout the second half of 2013,
although it remains somewhat lower than the same-rated peer median
(101% versus 106% at year-end 2013). This
improvement reflects a greater emphasis on relationship banking in both
the retail and commercial operations.
Looking ahead, Moody's expects continued improvement in FITB's
asset quality metrics; however, Moody's highlighted the
increasing pace of FITB's commercial and industrial loan growth,
including growth in credit syndications that generally contain larger
loan sizes. This is a concern because this growth has been achieved
in the context of heightened competition, looser industry-wide
underwriting standards and lower pricing which increase the risk profile
of these loan originations.
The principal methodology used in these ratings was Global Banks published
in May 2013. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
Issuer: Fifth Third Bancorp
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
.... Issuer Rating, Affirmed Baa1
....Multiple Seniority Shelf, Affirmed
(P)Ba1
....Multiple Seniority Shelf, Affirmed
(P)Baa3
....Multiple Seniority Shelf, Affirmed
(P)Baa3
....Multiple Seniority Shelf, Affirmed
(P)Baa2
....Multiple Seniority Shelf, Affirmed
(P)Baa1
....US$2000M Multiple Seniority Shelf,
Affirmed (P)Ba1
....US$2000M Multiple Seniority Shelf,
Affirmed (P)Baa3
....US$2000M Multiple Seniority Shelf,
Affirmed (P)Baa3
....US$2000M Multiple Seniority Shelf,
Affirmed (P)Baa2
....US$2000M Multiple Seniority Shelf,
Affirmed (P)Baa1
....US$1107.5M Pref.
Stock Non-cumulative Preferred Stock, Affirmed Ba1(hyb)
....US$600M Pref. Stock Non-cumulative
Preferred Stock, Affirmed Ba1(hyb)
....US$450M Pref. Stock Non-cumulative
Preferred Stock, Affirmed Ba1(hyb)
....US$250M Subordinate Regular Bond/Debenture,
Affirmed Baa2
....US$500M 5.4% Subordinate
Regular Bond/Debenture, Affirmed Baa2
....US$500M 4.5% Subordinate
Regular Bond/Debenture, Affirmed Baa2
....US$750M 4.3% Subordinate
Regular Bond/Debenture, Affirmed Baa2
....US$1000M 8.25% Subordinate
Regular Bond/Debenture, Affirmed Baa2
....US$1000M 3.625% Senior
Unsecured Regular Bond/Debenture, Affirmed Baa1
....US$500M 2.3% Senior
Unsecured Regular Bond/Debenture, Affirmed Baa1
....US$500M 3.5% Senior
Unsecured Regular Bond/Debenture, Affirmed Baa1
Issuer: Fifth Third Bank, Ohio
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
.... Adjusted Baseline Credit Assessment,
Maintained a3
.... Baseline Credit Assessment, Maintained
a3
.... Bank Financial Strength Rating,
Affirmed C
.... Issuer Rating, Affirmed A3
.... OSO Rating, Affirmed P-2
.... Deposit Rating, Affirmed P-2
....OSO Senior Unsecured OSO Rating,
Affirmed A3
....US$10000M Multiple Seniority Bank
Note Program, Affirmed (P)A3
....US$25000M Multiple Seniority Bank
Note Program, Affirmed (P)A3
....US$10000M Multiple Seniority Bank
Note Program, Affirmed (P)P-2
....US$25000M Multiple Seniority Bank
Note Program, Affirmed (P)P-2
....US$10000M Multiple Seniority Bank
Note Program, Affirmed (P)Baa1
....US$25000M Multiple Seniority Bank
Note Program, Affirmed (P)Baa1
....US$500M 4.75% Subordinate
Regular Bond/Debenture, Affirmed Baa1
....US$1000M Senior Unsecured Bank
Note Program, Affirmed P-2
....Senior Unsecured Deposit Program,
Affirmed (P)A3
....US$300M Senior Unsecured Regular
Bond/Debenture, Affirmed A3
....US$750M Senior Unsecured Regular
Bond/Debenture, Affirmed A3
....US$600M 1.45% Senior
Unsecured Regular Bond/Debenture, Affirmed A3
....US$400M 0.9% Senior
Unsecured Regular Bond/Debenture, Affirmed A3
....US$850M 2.375% Senior
Unsecured Regular Bond/Debenture, Affirmed A3
....US$650M 1.35% Senior
Unsecured Regular Bond/Debenture, Affirmed A3
....US$1000M 1.15% Senior
Unsecured Regular Bond/Debenture, Affirmed A3
....Senior Unsecured Deposit Rating,
Affirmed A3
Issuer: Fifth Third Capital Trust IV
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....US$2000M Pref. Stock Shelf,
Affirmed (P)Baa3
Issuer: Fifth Third Capital Trust IX
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....Pref. Stock Shelf, Affirmed
(P)Baa3
Issuer: Fifth Third Capital Trust VIII
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....Pref. Stock Shelf, Affirmed
(P)Baa3
Issuer: Fifth Third Capital Trust X
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....Pref. Stock Shelf, Affirmed
(P)Baa3
Issuer: Fifth Third Capital Trust XI
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....Pref. Stock Shelf, Affirmed
(P)Baa3
Issuer: Fifth Third Capital Trust XII
..Outlook Actions:
....Outlook, Remains Stable
..Affirmations:
....Pref. Stock Shelf, Affirmed
(P)Baa3
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Mark Vassilakis
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms Fifth Third (Senior Unsecured Baa1); stable outlook
