Huntington Bancshares Incorporated HBAN is slated to report fourth-quarter 2024 results on Jan. 17, before the opening bell. The company’s quarterly revenues and earnings are expected to have increased year over year.
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In the last reported quarter, the bank recorded a positive earnings surprise of 10%. Results reflected improvements in average loans and deposit balances. Also, the company recorded a year-over-year rise in fee income. However, a fall in net interest income (NII) and elevated expenses were headwinds.
HBAN has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 8.25%.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated Price and EPS Surprise
The Zacks Consensus Estimate for HBAN’s fourth-quarter earnings of 31 cents per share has been unchanged in the past seven days. The figure indicates a 14.8% decline from the year-ago reported number.
The consensus estimate for revenues is pegged at $1.90 billion, indicating a year-over-year rise of 9.7%.
Now, let us discuss factors that might have influenced Huntington Bancshares’ fourth-quarter performance.
Key Factors & Estimates for HBAN’s Q4 Result
Loans & NII: Last year, the Federal Reserve cut interest rates by 100 basis points. This is likely to have led funding/deposit costs to stabilize to some extent, aiding the company’s NII.
Management expects NII to be flat to up 1% from the $1.4 billion reported in the fourth quarter of 2023.
The Zacks Consensus Estimate for NII is pegged at $1.36 billion, indicating a 3% increase on year-over-year basis.
Per the Fed’s latest data, the demand for commercial and industrial loans, and consumer loans was solid in the fourth quarter.
Given the company’s significant exposure to commercial loans, HBAN is likely to have witnessed an increase in loan demand. This is expected to have supported average interest-earning asset growth in the fourth quarter.
Management expects average loans to increase 4-5% from the $120.8 million reported in the fourth quarter of 2023. The Zacks Consensus Estimate for average total earning assets of $183.7 billion for the quarter under review indicates a 7.2% rise from the prior year’s quarter reported level.
Non-Interest Income: Despite the central bank's interest rate cuts, mortgage rates did not decline significantly. Mortgage rates in the fourth quarter of 2024 were close to 6.8%, slightly higher than the 6.2% observed at the end of the third quarter. Despite this, refinancing activities and origination volumes were decent. This might have supported HBAN’s mortgage revenue growth in the quarter-to-be reported.
The Zacks Consensus Estimate for mortgage banking income is pegged at $33.7 million, suggesting an 46.7% rise from the prior year’s quarter reported figure.
Global mergers and acquisitions in the fourth quarter of 2024 rebounded after subdued 2023 and 2022. Deal value and volume were solid in the quarter, driven by a solid financial performance, buoyant markets, interest rate cuts and a strong U.S. economy. The anticipation of reduced regulatory oversight on mergers and acquisitions under the incoming Trump administration further fueled deal-making activity, while signs of recovery were evident in the capital markets. As a result, the company’s capital markets and advisory fees are expected to have increased.
The Zacks Consensus Estimate for capital markets and advisory fees is pegged at $82.9 million, indicating 20.2% growth on a year-over-year basis.
The strong performance of the equity market is likely to have supported wealth and asset management revenues in the quarter under review. The Zacks Consensus Estimate for wealth and asset management revenues is pegged at $94.3 million, indicating a 9.7% rise from the year-ago quarter’s reported figure.
The consensus estimate for customer deposit and loan fees for the fourth quarter is pegged at $87 million, indicating a 8.8% rise on a yearly basis.
The consensus mark for insurance income of $18 million implies a marginal decline from the year-ago reported figure.
Management projects non-interest income, excluding notable items, to rise 8-9% from the $509 million reported in the fourth quarter of 2023.
The consensus mark for total non-interest income is pegged at $525.1 million, indicating a 26.9% rise from the year-ago quarter level.
Expenses: Huntington Bancshares’ higher outside data processing and other services expenses, and deposit and marketing expenses are anticipated to have raised its costs in the third quarter. Also, the bank’s efforts to expand its commercial banking capabilities in high-growth markets by adding more branches and hiring professionals are expected to have contributed to increased costs.
Though strategic efficiency initiatives are likely to reduce expenses to some extent, long-term investments in key growth initiatives are expected to have kept the company’s expense base higher.
Management expects adjusted non-interest expenses, excluding notable items, to rise 3% to $1.1 billion in the fourth quarter of 2023.
Asset Quality: HBAN is likely to have set aside a substantial amount of money for potential delinquent loans, given the expectations of an economic slowdown.
The Zacks Consensus Estimate for total non-performing assets of $784 million, indicates significant increase from the prior year's quarter reported figure of $317 million.
What Does Our Model Unveil for HBAN?
Our quantitative model conclusively predicts an earnings beat for HBAN this time. This is because it does have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher. That is the case here, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Huntington Bancshares has an Earnings ESP of +21.7%.
Zacks Rank: HBAN currently carries a Zacks Rank of 2 (Buy).
Other Stocks to Consider
A couple of other bank stocks that also have the right combination of elements to post an earnings beat in their upcoming releases are Truist Financial Corporation TFC and State Street Corporation STT.
TFC has an Earnings ESP of +2.27% and a Zacks Rank of 3 at present. The company is slated to report fourth-quarter and 2024 results on Jan. 17.
STT is also scheduled to release fourth-quarter and 2024 earnings on Jan. 17. The company has an Earnings ESP of +0.67% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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