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What's in the Cards for Huntington (HBAN) in Q1 Earnings?
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Huntington Bancshares (HBAN - Free Report) is slated to report first-quarter 2023 results on Apr 20, before the opening bell. The company’s revenues and earnings are expected to have improved year over year.
In the last reported quarter, the bank recorded an earnings surprise of 4.88%. Results were benefited from notable increases in net interest income (NII) and a decline in expenses. However, a fall in fee income and higher provision from credit losses were headwinds.
Huntington has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.16%.
Huntington Bancshares Price and EPS Surprise
The Zacks Consensus Estimate for first-quarter earnings of 37 cents per share has been revised upward over the past week, reflecting the bullish sentiments of analysts. Also, the figure indicates a 15.63% rise from the year-ago reported number. The consensus estimate of $1.9 billion for revenues suggests a year-over-year increase of 15.56%.
Key Factors at Play
Loans: The lending environment has weakened in the first quarter, with the pace of loan growth across most categories slowing down as the quarter progressed. Per the Fed’s latest data, residential real estate loans, commercial real estate loans, consumer loans as well as commercial and industrial loan growth declined in the quarter under review. This is likely to have affected Huntington’s first-quarter performance, as the majority of its loan portfolio comprises commercial loans.
Nonetheless, the Zacks Consensus Estimate of $166.6 billion for average interest-earning assets in the quarter implies a marginal improvement on a sequential basis.
NII: The Fed hiked rates by 50 basis points(bps) in the to-be-reported quarter and 25 bps in the fourth quarter. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Such successive rate hikes are likely to have limited positive impact on the company’s NII.
Also, the pace of loan growth slowed from the prior few quarters due to an uncertain economic environment owing to the collapse of the Silicon Valley Bank and heightening recession fears during the reported quarter.
Thus, weakening lending scenario and lower-to-no positive impact of higher rates, is likely to have affected the company’s net interest margin (NIM) and NII.
The consensus estimate for NII indicates a 3.63% fall to $1.41 billion from the prior quarter’s reported figure.
Non-Interest Income: Huntington has remained focused on acquiring the industry's best deposit franchise. This has been improving its deposit base and service charges on deposit accounts over the years. In 2022, the service charges increased sequentially from the prior year and the trend is likely to have continued during the quarter under review.
The purchase mortgage originations are expected to have continued to decline in the first quarter whereas the refinancing originations might have remained almost stable sequentially. Also, mortgage rates during the quarter jumped from the prior year quarter, with the rate on 30-year fixed mortgage reaching 6.32% in March. The climb in mortgage rates has taken a toll on the origination market.
These factors are expected to have lowered Huntington’s mortgage banking fees in the to-be-reported quarter. Mortgage banking fees are estimated to be $22.93 million, suggesting an 8.28% dip on a sequential basis.
The macro-environment for deal-making is expected to have deteriorated in first-quarter 2023 amid uncertainty surrounding the economy and the banking industry. Hence it is expected that the M&A activities will be low and so the company’s capital markets fees are likely to have declined in the quarter. The Zacks Consensus Estimate for capital market fees is pegged at $76 million, indicating an 8.43% decrease from the prior-quarter’s reported figure.
The consensus mark of $473 million for non-interest income indicates a 5.21% sequential fall.
Expenses: Huntington’s investments in digital capabilities, marketing and hiring personnel to aid its revenue growth are anticipated to have raised its costs during the first quarter.
Asset Quality: Amid expectations of a worsening macroeconomic outlook and growing recession fears, HBAN is likely to have set aside more money to cover expected loan losses in the first quarter.
What Our Quantitative Model Reveals
Our proven model does not conclusively predict an earnings beat for Huntington this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Huntington is -0.42%.
Zacks Rank: Huntington currently has a Zacks Rank of 5 (Strong Sell).
Stocks Worth a Look
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
Peoples Bancorp (PEBO - Free Report) is slated to report first-quarter 2023 results on Apr 25. PEBO has an Earnings ESP of +1.02% and carries a Zacks Rank #3 at present.
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What's in the Cards for Huntington (HBAN) in Q1 Earnings?
Huntington Bancshares (HBAN - Free Report) is slated to report first-quarter 2023 results on Apr 20, before the opening bell. The company’s revenues and earnings are expected to have improved year over year.
In the last reported quarter, the bank recorded an earnings surprise of 4.88%. Results were benefited from notable increases in net interest income (NII) and a decline in expenses. However, a fall in fee income and higher provision from credit losses were headwinds.
Huntington has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 4.16%.
Huntington Bancshares Price and EPS Surprise
The Zacks Consensus Estimate for first-quarter earnings of 37 cents per share has been revised upward over the past week, reflecting the bullish sentiments of analysts. Also, the figure indicates a 15.63% rise from the year-ago reported number. The consensus estimate of $1.9 billion for revenues suggests a year-over-year increase of 15.56%.
Key Factors at Play
Loans: The lending environment has weakened in the first quarter, with the pace of loan growth across most categories slowing down as the quarter progressed. Per the Fed’s latest data, residential real estate loans, commercial real estate loans, consumer loans as well as commercial and industrial loan growth declined in the quarter under review. This is likely to have affected Huntington’s first-quarter performance, as the majority of its loan portfolio comprises commercial loans.
Nonetheless, the Zacks Consensus Estimate of $166.6 billion for average interest-earning assets in the quarter implies a marginal improvement on a sequential basis.
NII: The Fed hiked rates by 50 basis points(bps) in the to-be-reported quarter and 25 bps in the fourth quarter. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Such successive rate hikes are likely to have limited positive impact on the company’s NII.
Also, the pace of loan growth slowed from the prior few quarters due to an uncertain economic environment owing to the collapse of the Silicon Valley Bank and heightening recession fears during the reported quarter.
Thus, weakening lending scenario and lower-to-no positive impact of higher rates, is likely to have affected the company’s net interest margin (NIM) and NII.
The consensus estimate for NII indicates a 3.63% fall to $1.41 billion from the prior quarter’s reported figure.
Non-Interest Income: Huntington has remained focused on acquiring the industry's best deposit franchise. This has been improving its deposit base and service charges on deposit accounts over the years. In 2022, the service charges increased sequentially from the prior year and the trend is likely to have continued during the quarter under review.
The purchase mortgage originations are expected to have continued to decline in the first quarter whereas the refinancing originations might have remained almost stable sequentially. Also, mortgage rates during the quarter jumped from the prior year quarter, with the rate on 30-year fixed mortgage reaching 6.32% in March. The climb in mortgage rates has taken a toll on the origination market.
These factors are expected to have lowered Huntington’s mortgage banking fees in the to-be-reported quarter. Mortgage banking fees are estimated to be $22.93 million, suggesting an 8.28% dip on a sequential basis.
The macro-environment for deal-making is expected to have deteriorated in first-quarter 2023 amid uncertainty surrounding the economy and the banking industry. Hence it is expected that the M&A activities will be low and so the company’s capital markets fees are likely to have declined in the quarter. The Zacks Consensus Estimate for capital market fees is pegged at $76 million, indicating an 8.43% decrease from the prior-quarter’s reported figure.
The consensus mark of $473 million for non-interest income indicates a 5.21% sequential fall.
Expenses: Huntington’s investments in digital capabilities, marketing and hiring personnel to aid its revenue growth are anticipated to have raised its costs during the first quarter.
Asset Quality: Amid expectations of a worsening macroeconomic outlook and growing recession fears, HBAN is likely to have set aside more money to cover expected loan losses in the first quarter.
What Our Quantitative Model Reveals
Our proven model does not conclusively predict an earnings beat for Huntington this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Huntington is -0.42%.
Zacks Rank: Huntington currently has a Zacks Rank of 5 (Strong Sell).
Stocks Worth a Look
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
Independent Bank (IBCP - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 27. IBCP, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peoples Bancorp (PEBO - Free Report) is slated to report first-quarter 2023 results on Apr 25. PEBO has an Earnings ESP of +1.02% and carries a Zacks Rank #3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.