Huntington Bancshares beats profit estimates on capital markets strength (updated)

Huntington Bancshares

17/10/2024 23:04

(Repeats with no changes to text, headline to fix glitch)
    By Niket  Nishant and Nupur Anand
       Oct 17 (Reuters) - Huntington Bancshares'  HBAN.O 
third-quarter profit beat expectations on Thursday, as higher
underwriting and wealth management fees offset a hit from bigger
deposit costs.
    The bank has diversified beyond lending into fee-earning
businesses - a strategy that paid off as companies sold stocks
and bonds and pursued deals, driving up the fee that banks
charge for these transactions.
    Capital markets and advisory fees jumped 50%, while wealth
and asset management revenue rose 18%, Huntington said.
    Zach Wasserman, chief financial officer of the bank, said
the value-added fee businesses provide a cushion to the balance
sheet and are a significant support to bank financials.
    Net interest income (NII) - the spread between earnings on
loans and deposit costs - dipped 1% to $1.35 billion but was 3%
higher than the second quarter.
    Banks have paid more interest on deposits to prevent
customers from fleeing to higher-yielding alternatives.
    Wasserman expects 2025 to be a record year for NII.
    Huntington forecast fourth-quarter NII to be flat or up 1%
from last year. Analysts polled by LSEG had expected a rise of
3.9%.
    "Our increased loan growth should help boost NII," Wasserman
said on a call with Reuters.
    "We have been seeing growth in small business banking,
middle markets, consumer auto are some of the areas where we are
seeing good loan growth," he said adding that loan growth is
expected to sustain at the current 6% levels.
    CEO Steve Steinour also expressed optimism about next year.
    "Loan pipelines are robust as we enter the fourth quarter,
and we believe this growth momentum establishes a foundation for
growing revenue and expanded profitability heading into 2025,"
Steinour said.
    Provision for credit losses rose 7%, reaffirming a trend
that was also seen in reports from big banks as consumers
exhaust their savings built up during the pandemic.
    However, banks believe that the U.S. consumer is still
healthy.
    "Outlook around the economy is gradually improving and also
based on what we're seeing in our own portfolio, which continues
to indicate that we're not going to see any significant
worsening conditions," Wasserman said.
    Profit fell 5.5% to $517 million, or 33 cents per share, for
the three months ended Sept. 30, compared with expectations of
30 cents.
    Shares were down over 2%. They have gained nearly 22% this
year, underperforming the S&P 500 banks index's .SPXBK 27.7%
jump.

 (Reporting by Niket Nishant in Bengaluru and Nupur Anand in New
York; Editing by Arun Koyyur and Lisa Shumaker)
 ((Niket.Nishant@thomsonreuters.com;))