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Fifth Third 3Q profit rises 19 percent on share sale

Fifth Third Bancorp posted a 19 percent jump in third-quarter profit, thanks in part to the sale of shares in a former payment processing subsidiary.

The Cincinnati-based regional banking company on Thursday reported net income of $421 million, or 47 cents per share, for the three months ended Sept. 30. That compares with $354 million, or 38 cents per share, in the 2012 third quarter.

A sale of shares in former subsidiary Vantiv accounted for an $85 million, or 6 cents per share, pretax benefit.

Analysts surveyed by FactSet, on average, expected earnings of 42 cents per share. Those estimates typically exclude one-time gains and charges.

Net interest income, or income from loans and deposits, slipped 1 percent to $898 million from last year. Non-interest income, or earnings from fees and other charges, rose 7 percent to $721 million.

Net charge-offs of bad loans dropped 30 percent to $109 million.

Credit trends continue to improve as net charge-offs declined below 50 basis points of average loans and leases for the first time in six years, Fifth Third CEO Kevin Kabat told analysts during a conference call Thursday.

He said the income results reflected lower mortgage revenue as expected, but were solid.

Payoffs and paydowns offset new production in the commercial portfolio and higher interest rates reduced demand for mortgage loans and refinancing in Fifth Third’s consumer lending business, Kabat said.

He said Fifth Third continues to generate a relatively high level of profitability despite the challenges and attributed that to a strong focus on revenue results and lending and deposit gathering, as well as on continued expense discipline and credit improvement.

Associated Press writer Dan Sewell in Cincinnati contributed to this report.

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