Key facts
- Fifth Third Bank and Flagstar Bank experienced opposing changes in their interest rate risk profiles in Q1.
- A 200-basis-point rate decrease would have reduced Fifth Third's EVE by 4.3% as of March.
- Flagstar's exposure to rising rates diminished.
Two U.S. regional banks, Fifth Third Bank and Flagstar Bank, reported significant and opposing shifts in their management of interest rate risk in the banking book (IRRBB) during the first quarter. Fifth Third Bank's economic value of equity (EVE) became more exposed to falling interest rates, while its vulnerability to rising rates eased. Specifically, a hypothetical 200-basis-point downward shock in rates would have reduced Fifth Third's EVE by 4.3% at the end of March. In contrast, Flagstar Bank saw its exposure to rising rates decrease during the same period.