Fifth Third Bank 2005 Annual Report Download - page 7

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Maintaining Financial Discipline
Financial discipline is the foundation of great companies,
and great companies consistently deliver superior
risk-adjusted returns relative to the competition.
Fifth Third is determined to once again be one of those
companies. Our primary responsibility is to invest
shareholders’ capital in a manner that enhances value
while ensuring that our businesses are being properly
compensated for the level of risk being assumed.
We will continue to improve our ability to measure and
manage risk in all its various forms – credit, interest rate,
operational, liquidity and general business – in order to
reduce volatility and react more quickly to changing
business and economic climates.
“Our primary responsibility
is to invest shareholders’ capital
in a manner that enhances value while ensuring
that our businesses are being properly
compensated for the level of risk being assumed.”
In business, just as in personal finance, investment
climates are not all created equal. Fifth Third will take a
long-term view and will forego short-term profits if they
are accompanied by the potential for excess risk and
volatility. During 2005, Fifth Third:
• Responded to relatively low long-term interest rates
and a poor climate for acquisitions by returning
excess capital to shareholders. We increased the
dividend by 11 percent to $1.46 per common
share and repurchased 38 million shares, six
percent of total outstanding, for $1.6 billion.
• Responded to the relatively inferior return inherent
in continuing to invest in bond securities by
foregoing current period earnings through a
$5.6 billion, or 18 percent, reduction in average
securities held on the balance sheet.
5