Huntington Bancshares ((HBAN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Huntington Bancshares recently held its quarterly earnings call, which reflected a generally positive sentiment. The company reported significant growth in loans, deposits, and fee revenues, alongside strong financial performance metrics across various segments. Despite facing some challenges, such as a decline in commercial real estate balances and an anticipated dip in net interest income in the first quarter of 2025, the call maintained an optimistic tone due to robust credit performance and a promising growth outlook.
Record Fee Revenue and Growth in Loans and Deposits
The earnings call underscored record fee revenues and accelerated growth in both loans and deposits. Average deposits saw an impressive increase of $9.7 billion or 6.5%, while average loan balances rose by $7 billion or 5.7% year-over-year. This significant growth emphasizes Huntington’s strong positioning in the market.
Strong Financial Performance Metrics
Huntington Bancshares reported strong financial performance metrics, including earnings per common share of $0.34, a return on tangible common equity of 16.4%, and a CET1 ratio that ended the quarter at 10.5%, representing a 30 basis point increase from last year. These figures reflect the company’s solid financial foundation.
Exceptional Growth in Capital Markets and Wealth Management
Capital markets achieved a new quarterly revenue record of $120 million, marking a remarkable 74% increase from the previous year. Wealth management also showed impressive growth, with an 8% increase in fees and a 16% rise in assets under management (AUM).
Consistent Growth in Payments Segment
The payments segment demonstrated consistent growth, with an 8% year-over-year increase in the fourth quarter and a notable 16% rise in commercial payment revenues. This growth highlights the robust demand for Huntington’s payment solutions.
Positive Loan and Deposit Outlook for 2025
Looking ahead to 2025, Huntington Bancshares expressed optimism about loan and deposit growth, projecting a robust loan growth rate between 5% and 7% and deposit growth between 3% and 5% for the full year.
Decline in Commercial Real Estate Balances
A decline in commercial real estate balances was noted, with a reduction of $465 million during the quarter. This represents a challenge that the company will need to address moving forward.
Lower Net Interest Income Expected in Q1 2025
Huntington anticipates a 2% to 3% decrease in net interest income in the first quarter of 2025 due to normal day count headwinds and a slightly lower net interest margin. This expectation indicates a cautious approach to near-term financial forecasting.
Higher Noninterest Expense
The company reported a sequential increase in GAAP noninterest expense by $48 million, driven primarily by higher revenue-driven compensation expenses, indicating the cost pressures associated with achieving strong revenue growth.
Forward-Looking Guidance
Huntington Bancshares provided forward-looking guidance that reflects continued positive momentum into 2025. The company expects loan growth between 5% and 7%, deposit growth between 3% and 5%, and net interest income growth between 4% and 6%. Noninterest income is anticipated to grow by 4% to 6%, driven by areas such as payments, wealth management, and capital markets. Additionally, the company aims to manage expense growth within 3.5% to 4.5%, with a focus on maintaining positive operating leverage.
In summary, the earnings call for Huntington Bancshares conveyed a largely positive sentiment, driven by strong financial performance and a promising outlook for 2025. Key takeaways include record growth in fee revenues, impressive gains in the capital markets and wealth management, and a strong forecast for loan and deposit growth. While challenges such as declining commercial real estate balances and expected reductions in net interest income lie ahead, Huntington Bancshares remains optimistic about its growth trajectory.
