* Q4 net interest income expected to rise vs Q3
* Shares up 1.2 pct in a broadly lower market
* Q3 adjusted EPS beat Refinitiv estimates (Adds outlook, shares)
Oct 23 (Reuters) - Fifth Third Bancorp said on Tuesday it expects fourth-quarter net interest income to rise by around 2 percent from the preceding quarter, sending its shares up on a day when financial stocks were leading a selloff in the wider market.
The company's net interest margin is expected to rise by up to 3 basis points in the current quarter from the third quarter, it said on a post-earnings call.
Shares of the Cincinnati, Ohio-based company rose 1.2 percent to $25.65 in early trading, even as most regional peers fell - PNC Financial and Capital One Financial slipped around 2 percent, while Comerica shed 1 percent. The KBW regional banking index fell 0.6 percent.
Fifth Third reported a better-than-expected third quarter profit as it earned more from interest-bearing assets and gave out more commercial loans.
U.S. banks have benefited from higher interest rates since the Federal Reserve started raising them in 2015. Higher interest rates allow banks to charge customers more for loans, while maintaining relatively low cost of borrowing from deposits.
Most regional banks have posted an increase in loans in the latest quarter, even as mortgage lending slowed. Commercial loans have risen the most as businesses borrow more to reduce their cost of borrowing in a rising interest rate environment.
Consumer loan growth has been relatively sluggish as higher interest rates reduce borrowers' ability to take out costly loans.
Fifth Third's net interest income rose 7 percent to $1.05 billion in the quarter, while total commercial loans and leases increased 2 percent to $57.74 billion.
The company's total consumer loans rose 1 percent to $35.46 billion in the third quarter.
Net income attributable to common shareholders fell to $418 million, or 61 cents per share, in the quarter ended September, from $999 million, or $1.35 per share, a year earlier. reut.rs/2AnyaY8
On an adjusted basis, Fifth Third earned 64 cents per share, brushing past estimates of 63 cents, as per Refinitiv data. (Reporting By Aparajita Saxena in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)