April 17 (Reuters) - Fifth Third Bancorp ( FITB ) reported a rise in first-quarter adjusted profit on Friday, driven by increased net interest income and strength in its capital markets division.

Federal Reserve rate cuts in late 2025 helped U.S. banks lower deposit costs and stimulate loan demand, keeping borrowing levels resilient during the quarter despite broader macroeconomic headwinds.

The bank's net interest income, the difference between what the bank earns on loans and pays out on deposits, rose more than 34% to $1.93 billion from a year ​earlier.

Net interest margins, which measure the profitability of lending operations, expanded 27 basis points in the first three months of 2026.

Average portfolio loans and leases grew to $157.63 billion from $121.27 billion a year earlier.

Cincinnati, Ohio-based Fifth Third, which closed the multibillion-dollar Comerica deal in February, has outperformed the broader markets so far in 2026, with its shares climbing about 6% as of the last close.

"Early financial benefits (from the acquisition) are already showing up, including strong net interest margin expansion and tangible book value per share growth," Fifth Third CEO Tim Spence said.

The adjusted net income available to common shareholders rose to $731 million in the three months ended March 31, compared ​with $502 million ‍a year earlier.

The lender's results mirror trends seen at larger peers such as JPMorgan Chase ( JPM ) and Bank of America, which also reported higher profits on stronger net interest income and capital markets activity.

Capital markets fees at Fifth Third rose 49% in the first quarter to $134 million, driven by client financial risk management revenue.

The lender on Friday said that it had limited exposure to private credit, at a time when transparency and liquidity concerns spooked investors.

Shares of the lender were up marginally in trading before the bell.