Fifth Third's Interest-Rate Strategy Is Paying Off
Interest rates typically have a significant impact on bank stocks. When rates go up, it's usually good for banks because their margins expand as they charge more for lending. Conversely, when rates go down, banks' profits are typically hurt as they earn less for lending. Banks have seen both the ups and the downs lately -- after roughly two years of rates creeping upward, the Fed started bringing them back down in July.
Cincinnati-based Fifth Third Bancorp (NASDAQ: FITB) has mitigated the impacts of the downward trajectory of interest rates, and the strategy has paid off with increased market share. Its stock price is up about 27% year to date, outperforming the average return in the financial sector. In the third quarter, net income rose 26% year over year to $530 million and earnings per share jumped 25% year over year to $0.71.
Photo Credit: Getty Images
Source Fool.com
