Strategic Analysis of Fifth Third Bank Assignment

Running head: STRATEGIC ANALYSIS OF FIFTH THIRD BANK
Strategic Analysis of Fifth Third Bank
Name of the Student
Name of the University
Author’s Note

1STRATEGIC ANALYSIS OF FIFTH THIRD BANK
1. Products, Services and Market
Fifth Third Bank provides various services and products and professional experience that the
customers can rely upon for conducting the business oversees and all over the world. The
services they provide are as follows –
 It manages the receivables and payables over multiple time zone and all over the world
involved with different currencies.
 Accelerate the deposits and manages the working capital for daily business requirements
(Fifth Third Bank, 2017).
 Optimizes the payment and financing for the exported as well as imported goods
 Execute the transactions related to corporate banking among the foreign and domestic
businesses.
Further, it simplifies the daily foreign currency account management of the customers
and optimizes the cash flow. Moreover, it has commercial solutions for banking host for
assisting the financial institutions that are located outside of US. It further improves the
procedure of import in association with the solutions related to finance, mitigate the risk,
optimize the cash flow and reduce the requirement of working capital.
2. Review of the Firm
Industry Overview
The banking industry in U.S. at present is diverse business that fulfils the financial
requirements of the corporations as well as the consumers. Irrespective of the complex corporate
scenario, the banking industry is growing rapidly and becoming an integral part of the daily

2STRATEGIC ANALYSIS OF FIFTH THIRD BANK
activities. However, the banking industry has been changed over the past few years. The market
superiority is not only considered about who has most bricks but also considered about how
efficient the bank can provide the services to the customers. It means the remote, anywhere,
anytime access for their transactions. Billions of amounts will be saved in the costs for the
annual real estate as the banks are increasingly connecting through Fintech and mobile apps.
Competitor Analysis
Among others, the major competitors of Fifth third bank are –
 BB&T Corp – the operating strategy of BB&T is unique as each of the subsidiaries of
banking is well organized as community group for bank and each with the regional
president. This enables them to deliver world class services as majority of the decisions
are locally made that is close to the clients (BB&T Bank | Personal Banking, Business
Banking, Mortgages, Investments, 2017).
 Key Corp – Key Corp is one of the largest banks in the country that provides financial
services. The bank is generating sustainable communities through reduction of the
environment footprint. Further, they are building the better communities through
philanthropy, grants and volunteerism (Key.com, 2017).
 M&T Bank Corp – M&T bank Corp is the regional company that provides financial
services to more than $120 billion under assets. They provide insurance, banking,
mortgage, commercial and investment services through 1600 ATMs, 800 branches and
wide range of mobile and online services (Mtb.com, 2017).

3STRATEGIC ANALYSIS OF FIFTH THIRD BANK
PEST Analysis
The banking sectors have an impact on all over the country. However, it is associated
with various factors like economy and government. Further, the banks are not able to make their
own independent decisions and shall deliver the services on the basis of particular laws and
regulations that may impact the offerings and growth. The major factors that affect the banking
industries are –
 Political factors – though the banking sectors seem to be powerful, it is susceptible to the
risks from the government regulation. The laws of the government have an impact on the
state of banking industry. However, the government can interfere in the banking matters
whenever wants and it exposes the industry susceptible to the political influences. This
involves particular legislative laws like trade restrictions, labour laws, political stability,
tariffs and corruption within the political parties.
 Economic factors – economy of a country and the banking industry are strongly tied. The
way of income flows irrespective of the fact that the economy is improving or
deteriorating during recession, have an impact on the way the capital bank have their
access. The spending habits of the people and the reasons behind that affects while the
customers spend or borrow funds from banks. Apart, from that during inflation, generally
the banks face the risks of backlash. Further, the inflation affects the value of currencies
that leads to instability. The foreign investors consider the risk twice before investing
their funds while the particular nation’s value of currency is higher. Moreover, the
exchange rates have an impact on the banks all over the world. The stable currencies like
US dollars affect various other currencies, inflation rates and spending habits of various
other countries.

4STRATEGIC ANALYSIS OF FIFTH THIRD BANK
 Socio-cultural factors – the cultural factors like necessities and purchasing behaviours
affect the way in which the people use and see the banking options. People generally turn
to the banking services for assistance and advises for loans in association with the
academics, home and business. Clients seek the knowledge from bank tellers for the
credit cards related to the bank, savings accounts, investments and many more. The
clients prefer seamless experiencing with regard to the bank and the technologies are
developed to enable the consumers to purchase the products easily without the assistance
from the banks directly (Ab Talib et al., 2014)
 Technological factors – the new technologies are altering the way in which the clients
manage their funds. Various banks provides mobile app for witnessing the accounts, pay
their bills and transfer the funds through using their smart phones. The smart phones are
able to scan the cheques and the bank thereafter can proceed that from their ends, at their
location. These changes assist to minimize the paper usages and the requirement of drive
the affairs to be handled by the branches. The debit cards usage and terms are also getting
changed. Chips are implemented that requires the clients to insert the card into the debit
machines instead of swiping them. in other countries like Canada, they implemented tap
option that is tapping debit card into the device completes the transaction without being
asked for the pin. These alterations make it simpler for the users to purchase any product
without requiring the intrusions from the banks. Even the banks are utilizing the
technologies within their own workplace. Telecommunication through the virtual
meetings is also been introduced that replaces the requirement of personal meetings.

5STRATEGIC ANALYSIS OF FIFTH THIRD BANK
SWOT Analysis
Strengths – the Fifth Third bank has large amount of financial assets and stable financial
position. It has large number of banking centres all over USA and wide employee base of
approximately 22000. They are involved in aggressive acquisition and merger procedures. This
is the only bank that did not cut the jobs during the period of sub-prime crisis. Further, they are
ranked among the top most companies those are trusted.
Weaknesses – it is alleged for the security related concerns and breaches regarding the technical
part as per the past records. Further, it only focuses on the services related to limited banking.
Moreover, the rising in the corporate and retail non-performing assets is one of the major issues
that is growing fast in the banking sector (Rothaermel, 2015).
Opportunities – it has the competitive advantages for introducing various services related to
additional banking. They are also opened to the acquisitions, mergers and expansions within
North America. They are also involved in the tie ups that will enable to enhance the market
positions.
Threats – the global slowdown may affect the performance of the business. Further, is is
threatened to high degree of the competition in the locality. The competition for the non-banking
financial organizations like insurance companies and the mutual fund organizations are affecting
the banking business. The recession is also playing as the major threat to the country’s financial
system.

6STRATEGIC ANALYSIS OF FIFTH THIRD BANK
3. Financial Analysis
The main aim of this part is to analyze the major financial rations Fifth Third Bank. The
analysis of major rations needs to be done in order to measure the financial performance of the
bank. For this reason, the rations are analyzed based on last financial year so that the trend of
financial performance of Fifth Third Bank can be determined. After this analysis part, these
ratios are compared with the ratios of major competitors of Fifth Third Bank. The analysis is
shown below:
Profitability Ratios
Fifth Third Bank 2011 2012 2013 2014 2015 2016
Return on Assets (%) 1.15 1.34 1.48 1.12 1.22 1.1
Return on Equity 11.4 14.3 16 12.2 13.5 11.6
NIM 3.66 3.55 3.32 3.1 2.88 2.88
2011 2012 2013 2014 2015 2016
0
2
4
6
8
10
12
14
16
18
Return on Assets (%)
Return on Equity
NIM
The above table and graph shows the profitability ratios of Fifth Third Bank. From the
above table, it can be observed that from 2011 to 2013, there is a rise in the ratio of return on
assets. However, massive fall in this ratio can be noticed from 2015 to 2016 (ir.53.com, 2017). It

7STRATEGIC ANALYSIS OF FIFTH THIRD BANK
implies that Fifth Third Bank has not been able to utilize its assets for gaining returns. Almost
same trend can be seen in case of return on equity as there has been rise in this ratio from 2011 to
2013. However, decrease in this ratio can be seen in 2014 and the ratio is the second lowest in
2016. It implies that Fifth Third Bank has not been able to fetch maximum return from its equity
investments. In case of NIM, it can be noticed that from 2011 to 2016, NIM has been decreased
continuously (ir.53.com, 2017). In the years 2015 and 2016, the NIM ratio is the lowest among
the six years. From this analysis, it can be understood that Fifth Third Bank has not been able to
fetch maximum interest from their investments. Thus, overall basis, it needs to be mentioned that
the profitability position of Fifth Third Bank is not as effective as it needs to be as the ratios have
been declining on a regular basis.
Liquidity Ratios
Fifth Third Bank 2011 2012 2013 2014 2015 2016
Loans 83972 88721 89558 91345 93485 92849
Deposits 85710 89517 99275 101275 103205 103821
Tier 1 12 10.69 10.43 10.83 10.93 11.05
Loans/Deposits 0.98 0.99 0.90 0.90 0.91 0.89
Capital Adequacy Ratio 8.25% 8.65% 7.85% 7.25% 8.50% 9.30%
2011 2012 2013 2014 2015 2016
0
2
4
6
8
10
12
14
Tier 1
Loans/Deposits
Capital Adequacy Ratio

8STRATEGIC ANALYSIS OF FIFTH THIRD BANK
From the above table and graph, it can be seen that Fifth Third bank has been adjusting
their capital retention proportion since 2011. From the loan/deposit ratio, it can be seen that the
bank provide loans of almost 90% of the total deposits (ir.53.com, 2017). In addition, from the
Tier I ratio, it can be observed that Fifth Third Bank has been reducing their deposit of capital
since the year 2011. It has been done in order to make the bank able to fight any kind of financial
crisis. Thus, from the analysis, it can be said that the liquidity position of Fifth Third Bank is
good.
Financial Leverage
Fifth Third Bank 2011 2012 2013 2014 2015 2016
Leverage Ratio 9.14 9.15 9.62 9.7 9.72 9.56
Debt to Equity 0.76 0.53 0.71 1.04 1.09 0.97
2011 2012 2013 2014 2015 2016
0
2
4
6
8
10
12
Leverage Ratio
Debt to Equity
From the table and graph, it can be seen that the debt to equity ratio of Fifth Third Bank
is high and it has been increasing since 2011. It implies that the bank includes more debts in the
capital structure than equities (ir.53.com, 2017). Thus, it can be understood that Fifth Third Bank

9STRATEGIC ANALYSIS OF FIFTH THIRD BANK
has to bear major interest expenses. For this reason, the financial leverage of the bank is high.
Higher financial leverage implies the existence of more debts in the capital structure.
Comparison with the Competitors
Competitors BB&T Corp Key Corp M&T Corp
Return on Assets (%) 1.12 0.69 1.05
Return on Equity 8.57 6.27 8.13
NIM 3.39 2.91 3.08
Tier 1 9.5 9.6 13.4
Capital Adequacy Ratio (%) 8.5 6.75 9.5
Return on
Assets (%) Return on
Equity NIM Tier 1 Capital
Adequacy
Ratio (%)
0
2
4
6
8
10
12
14
16
BB&T Corp
Key Corp
M&T Corp
As compared to three major competitors that are Key Corp and M&T Corp, Fifth Third
Bank has better position in terms of return on assts. However, BB&T Corp has better return on
assets position that of Fifth Third Bank (investor.key.com, 2017). However, in case of return on
equity, it can be seen that Fifth Third Bank has better return on equity ration than all of these
three competitors. The situation is just opposite in case of NIM ratio. From the table, it can be
seen that the NIM of the three competitors are superior to Fifth Third Bank.

10STRATEGIC ANALYSIS OF FIFTH THIRD BANK
References
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files/dc09be46-72b9-4425-85a9-565a54498792
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15.pdf
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Retrieved 4 October 2017, from https://www.bbt.com/
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https://www.key.com/about/index.jsp
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Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.