Huntington Bancshares beats profit estimates on capital markets strength
Adds quote, context in paragraph 4, 7, 9-10, 14-15, and updates share price
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 soldstocks 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-addedfee 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 moreinterest 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
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