More Conservative Assumptions Should Help Fifth Third

Fifth Third (FITB) has been a relative laggard compared to its peer banks so far this year, and most of that divergence occurred with the announcement that the CFPB filed suit against the bank for unauthorized account openings, bringing to mind the massive scandal at Wells Fargo (WFC). It also hasn't helped that Fifth Third's loan book is perceived as riskier than its peer average.

Based on management disclosures, I don't think the fallout from the account issue will be nearly as bad as it has been for Wells Fargo. I also think that Fifth Third's riskier loan book is mitigated by management taking a more bearish view of the COVID-19 recession and recovery, leading the bank toward a more conservative reserving approach. Fifth Third has never been among my favorite banks from an operational standpoint, but at a 20% discount to tangible book, this is a name worth considering now.

Read the complete article here:
More Conservative Assumptions Should Help Fifth Third