Huntington Bancshares nasdaq Hban Braces for Net Interest Income Decline Stock Tumbles

Huntington Bancshares (NASDAQ: HBAN) Braces for Net Interest Income Decline, Stock Tumbles

Huntington Bancshares (NASDAQ: HBAN) stock plummeted during intraday trading Monday after the regional lender provided a bleak 2024 net interest income forecast.

During the Morgan Stanley-hosted conference, Huntington Bancshares announced a revision to its net interest income (NII) outlook for 2024. The bank now expects a 1% to 4% decline from the previous year, compared to its earlier forecast of a 2% decline to a 2% gain.

Zach Wasserman, Chief Financial Officer of Huntington, attributed this revision to factors including lower loan growth as the bank prioritizes maintaining high marginal returns and slightly higher funding costs due to robust deposit growth.

In line with the revised NII forecast, Huntington lowered the upper end of its projected loan growth range to 4% from an earlier estimate of 5%. Additionally, the bank expects to end the year with higher deposit growth than initially forecasted.

In April, Huntington reported a 33% year-over-year decline in earnings per share (EPS) for the first quarter, as high interest rates dampened lending activity. Despite this, total deposits at the end of the quarter were 5% higher than the previous year. However, the competition to attract these deposits has squeezed margins.

While Huntington faces these challenges, the nation’s largest banks have benefited from more diversified revenue streams, including a resurgence in capital markets trading. Conversely, smaller lenders might encounter additional difficulties if strong economic data and persistent inflation prompt the Federal Reserve to delay interest rate cuts further. Regional banks and their investors may gain insights into the Fed’s anticipated rate cut trajectory when policymakers release their economic and interest rate outlook.

Huntington Bancshares (NASDAQ: HBAN) Stock Reaction

On Monday, HBAN stock plunged 6.12%, closing at $12.58, marking a 7.97% decrease for the week. The trading volume was 51,959,760 shares, significantly higher than the average daily volume of 15.02 million.