Dear Shareholders,
Our ambition: to be the One Bank people most value and trust.
We make decisions related to credit, liquidity and capital with a long-term, through-the-cycle focus. Credit quality remained historically strong, reflecting disciplined client selection, underwriting and a continued benefit from COVID-19 stimulus programs. We took several actions during the year to strengthen our balance sheet and protect against lower rates well beyond the next few years. These actions are a combination of a differentiated securities portfolio strategy focused on generating stable cash flows, a $15 billion derivatives portfolio that will provide hedge protection through 2031 and our fixed rate lending capabilities. These balance sheet management actions and more give us confidence in maintaining a net interest margin of around 3.30% for multiple years even if the Federal Reserve eventually lowers rates by 200 basis points.
"I am confident that we have your Bank on strong footing and will perform well regardless of what the macroeconomic environment brings."
We are focused on delivering innovation that empowers customers. We have never forgotten that the money we handle is more than just money to our customers. It represents their livelihoods, their safety nets, their challenges and their dreams. We invest in technology to empower our customers to do the things they need to do better, faster and with more control and efficiency. One example of this: More than one million consumer households now use our innovative Fifth Third Momentum® Banking offering to manage their everyday financial needs. In 2022 alone, these customers received more than 27 million paychecks up to two days early and avoided approximately $39 million in overdraft fees. Similarly, commercial clients using our accounts payable and accounts receivable automation solutions are estimated to have saved more than $32 million in operational expenses during the year.
We were also very pleased with the strong growth of our fintech platforms, Provide and Dividend Finance. Provide enables dentists, veterinarians and other medical professionals to purchase or expand their medical practices. Provide finished the year ranked #2 in national market share in its focus markets. Dividend provides homeowners with financing for residential solar and other energy-efficient home improvement projects. Dividend ranks #3 nationally in residential solar financing and, since we closed the acquisition of Dividend in May 2022, the team has helped more than 47,000 homeowners to start generating their own renewable energy.
Community Commitment
We are committed to enhancing the well-being of the communities we serve. Banks inhabit a special place in the communities where they operate, and with that comes a special responsibility to promote vitality, sustainability and equity. During the year we made substantial progress on our $2.8 billion pledge to accelerate racial equity, equality and inclusion and are positioned to fulfill our commitments ahead of the three-year schedule. We also announced a new $100 billion environmental and social finance target to be achieved through 2030.
Having completed more than 30 visits to our regions and having met with well over 100 customers and community partners in 2022, I can say with confidence that the Bank's reputation has never been stronger. Fifth Third was again recognized by Ethisphere on its list of the World's Most Ethical Companies®.
In closing, I am confident that we have your Bank on strong footing and will perform well regardless of what the macroeconomic environment brings. Thank you for your continued support.
Read the original letter here.
