FITB
#It is, <UNK>.
We are not seeing necessarily an impact of the slowdown yet in our manufacturing base.
All we are doing is we are just recognizing that globally manufacturing is slowing down.
Consumer tends to be stronger.
But we are seeing slowdowns.
And just recognizing, again, where we are in the expansion cycle, recognizing that the global slowdown may impact US manufacturing activity, but this is nothing specific relative to our specific clients or borrowers.
It's more a recognition of the global macro environment.
Fourth quarter tends to be a strong quarter in terms of pipelines.
We've seen good production in Q3, and we are looking into Q4 with similar levels of activity.
This is <UNK>.
We have a very small international book overall.
And again, as we've said before, we have a small number of commodity clients that we value, we've had a long-standing relationship with, that have ties back into the US, back into our Company.
But our overall international exposure is very small.
It's a very small piece of our Company, and our overall commodity exposure, as we indicated before, is very small as well.
We are managing the book appropriately and are comfortable with the relationships that we have in place.
We do not have an appetite to increase our exposure broadly in that sector.
And <UNK> mentioned it's a pretty short-duration portfolio.
This is not a long-term commitment that we are talking about.
We are clearly cognizant of the global environment, and we will make those decisions appropriately.
Just about $5 million.
I think obviously our commercial business is a source of opportunity for us, as is our wealth business, which is growing nicely, traditionally, over the years.
But, in addition to that, we've launched the payments division, and you look at our currency processing solutions and our technology play in that sector supporting our retail and our healthcare sector.
So I think payments as a source of opportunity for us, and we are looking hard at that technology stack, how can we be more additive in that respect through some potential M&A opportunities.
We're also continuing to expand our footprint where appropriate in mid-corporate and also our talent on the middle-market side of the house.
There's opportunities there, I think, to continue to grow.
So it's really, once again, continuing to focus on quality relationships in our commercial business, partnerships and extracting value in our payments business and being additive to our technology stack, and obviously, wealth management, I think, is a key integral part of our one-bank strategy.
So I think those are the three areas where we can see some uplift in revenue.
And if you look at our strategies, they are really focused in those key areas, from a revenue perspective.
<UNK>, that's tough to say, but I would tell you this.
Anytime there's an opportunity to create long-term shareholder value we're going to take a look at that opportunity, and that's important.
But there's really no change to our core strategy around M&A.
If it's bank M&A, we really want to be more relevant in our core markets today where we can better serve our customers and extract more efficiencies.
So if we do a bank M&A opportunity, it's really going to be in our current markets.
But we're also looking at opportunities, as I mentioned earlier, to be additive to our payments business in that technology stack there, once again supporting our commercial business in retail and healthcare.
We think there are some opportunities there from an M&A perspective.
Let me give you my side, and then <UNK> will comment on it as well.
<UNK>, the difficulty is that it's extremely difficult to look back and compare what happens pre-crisis with rate moves because we're operating under a significantly different liquidity structure and market structure.
Our cautiousness is due to the unknowns.
We want to make sure that we discuss with you what the outcomes maybe.
I don't think there is anything specific to Fifth Third that would drive these betas higher compared to our peers.
It's just a fact that under the current liquidity rules, which have never been in place before, it's difficult to extract our future experience, based upon past experience.
And we do use the 70% beta on every move, so it's not a gamma issue.
But, as <UNK> said, we will work very hard to potentially outperform that, and frankly, our concern and why we use the 70% beta is the combination of the LCR impact on our retail deposits and, frankly, on banks that are not LCR compliant, whereas we already are.
So, if anything, you may say we should be able to outperform better than a 70% beta, but you also have technology is definitely at a different state in the banking industry today than it was 10 years ago, in the last Fed tightening cycle.
In the last tightening cycle, we were right on the peer average of a 50% beta, and now we just our conservatively modeling a 70% beta, as <UNK> said, due to the unknowns.
If we are able to operate at a 70% data, a 25 basis point move in the Fed funds rate is about a $70 million NII benefit annually, and if we are able to execute at a 30% data, the number is about $120 million.
So we just want to size up the impacts and just make sure that everyone understands the importance of the underlying assumptions that go into both your deposit betas s and then ultimately your asset sensitivity.
It will be interesting when, if we ever do get that first 25 basis point, when the comments are, we are going to stop and wait and see what everybody else is doing.
If everybody is looking at everybody else, nobody is moving, which just to my mind predisposes to a little bit better beta early on versus later on in the cycle.
So it will be interesting if we get that first move and see what happens.
Correct.
That would be correct.
Well, what I would tell you is, first off, we live in a technology era, and you are seeing that with respect to our user preferences and how they want to bank anytime, anywhere.
If you look at our mobile deposit applications, right now 15% of all of our deposits are coming through our mobile app, 38% through our digital channels.
<UNK>, we've been very mindful of the impact that has on our branches and branch traffic and so forth.
So we are really engineering for a couple of things.
One is how do we touch and sell to our customers differently going forward, and also how do we drive back-office efficiencies and improvement, and what does that mean to our distribution channels, i.
e.
, our branches.
What do they look like and how many do we need.
We think we are at the right level right now.
I can't quantify that at this point.
I think at the end of the game we want to be very efficient in how we serve our channels, and I think retail and a lot of the stress on the retail revenue side of the house drives you really to focusing on efficiencies in how you serve that channel.
That's a benefit for the customer and the bank.
So it's really after efficiency, better service.
At the end of the day, net-net, that's the model we want to be in, and we absolutely are focused on efficiencies here, <UNK>.
I think it's all of the above.
It's hard to quantify.
What I can tell you is, when we look at our strategies in 2016 and 2017, what we are rolling out, we are focused on how do we roll that out faster, how do we drive those efficiencies quicker, and how do we serve the customer better.
So we are really looking at how we sharpen our pencil on the execution side of the house and get a better return quicker on our investments.
And <UNK>, it's also the increase in the average hours of work for <UNK>'s team.
That's also another metric that we (multiple speakers) ---+
We are asking a lot of them.
