Fifth Third Bancorp's (FITB) Chief Financial Officer Ross Kari said the Cincinnati bank would wait until the economy improves until it would repay cash from the government.

"It's been in the back of our mind, but we don't see the improvement in the credit trends that we'd like to see quite yet," Kari said during a conference call with investors. "Things...haven't started to come down yet and really that's what I think we'd like to see" before repaying TARP.

Meanwhile, he said he expects "mortgage banking revenue to be as strong as anything we saw last year, but to be lower than the past two quarters."

Kari also said that Fifth Third is "seeing continued caution from commercial customers, with many companies waiting for better visibility on the economy before investing in new capital projects."

That will translate into less loan demand, he said. "Our average commercial loans decreased 3% on both a sequential and year-over-year basis" in the second quarter. "Average consumer loans were down 2% sequentially and down 1% on a year-over-year basis."

"Overall portfolio loan growth will likely remain sluggish in the near term due to high personal savings rates and general caution by commercial and consumer borrowers," Kari said.

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; matthias.rieker@dowjones.com