April 19 Reuters Fifth Third Bancorp posted a 10 drop in firstquarter profit on Friday as higher deposit costs weighed on the lender39;s interest income.

Regional banks have steadily increased the interest rates they offer on deposit accounts to retain customers looking for greater returns by parking their money in higheryielding alternatives.

Cincinnati, Ohiobased Fifth Third39;s net interest income on a reported basis the difference between what a bank earns on loans and pays on deposits fell nearly 8.8 to 1.38 billion in the quarter.

Net interest margin contracted to 2.86 in the first quarter versus 3.29 in the yearago period.

Fifth Third continues to expect its NII in 2024 to decline between 2 and 4. Analysts on average expect it to fall 3.4, according to LSEG data.

Regional peers U.S. Bancorp and KeyCorp reported their earnings on Thursday and posted similar NII declines.

Provision for credit losses fell to 94 million in the quarter from 164 million last year.

Higher interest rates have also tempered the demand for loans as borrowers sit on the sidelines waiting for rate cuts.

Fifth Third39;s total average portfolio loans and leases fell 4 to 117.33 billion in the quarter, hurt by a decrease in its consumer and commercial portfolios.

Meanwhile, the bank39;s total average deposits rose 5 to 168.12 billion, helped by higher interest checking and money market accounts.

The lender39;s net income available to common shareholders fell to 480 million, or 70…