Q4 2024 Earnings Summary
- Huntington is experiencing robust loan growth, with pipelines 50% higher this year compared to last, reflecting positive borrower sentiment and expectations for 2025 and beyond.
- The company achieved record asset finance in the fourth quarter, indicating unlocking of customer investments and increased financing activities, contributing to strong core growth.
- Huntington prioritizes top quartile organic growth, having made significant investments leading to strong performance, and remains confident in future growth opportunities, focusing on organic growth over M&A.
- Stress capital buffer at minimum level: Huntington Bancshares' stressed capital buffer remains at the minimum 2.5%, and they do not plan to increase it. This may raise concerns about their ability to withstand potential economic stress, especially amid geopolitical volatility.
- Ongoing investments leading to net expense growth: The company has made significant investments in regional expansions and new verticals, resulting in net expense growth. While they are focused on organic growth, these continuous investments could strain resources and impact profitability if expected returns do not materialize.
- Uncertainty regarding regulatory changes: With the new administration and changes in regulatory leadership, there is uncertainty about potential regulatory adjustments. Huntington anticipates a more pro-business environment but acknowledges that if expected regulatory changes do not develop, it could pose challenges for the bank.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Fell from $5,198M to $1,968M (~62% decline) | The dramatic decline in total revenue in Q4 2024 suggests that revenue in Q4 2023 included non‐recurring or extraordinary items that did not recur, or that there was a significant reclassification in revenue streams. This contrasts with the more stable trends in Q3 metrics. |
Operating Income | Rose from $247M to $669M (~171% increase) | Operating income surged dramatically as cost management and expense reductions significantly improved core profitability. This improvement, with the operating margin rising from around 5% to 34%, likely reflects successful operational initiatives and tighter expense controls that built on some earlier quarter strategies. |
Net Income | Increased from $243M to $530M (~118% increase) | Net income more than doubled in Q4 2024, indicating that despite the revenue drop, the effective control of expenses and improved operating performance helped drive profitability. This growth is consistent with increased efficiency compared to prior periods where operating pressures were balanced by higher non‐interest expenses. |
EPS | Increased from $0.15 to $0.34 (~127% improvement) | EPS improvements are driven by higher net income and stable share counts. The substantial rise in both basic and diluted EPS in Q4 2024 reflects the combined impact of cost discipline, better margin performance, and a significant rebound in operating income compared to the prior period’s figures, aligning with the net income gains. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Loan Growth | FY 2025 | ~6% | 5% to 7% | no change |
Deposit Growth | FY 2025 | no prior guidance | 3% to 5% | no prior guidance |
Net Interest Income | FY 2025 | expected to achieve record NII dollars | 4% to 6% | no prior guidance |
Noninterest Income | FY 2025 | no prior guidance | 4% to 6% | no prior guidance |
Expense Growth | FY 2025 | no prior guidance | 3.5% to 4.5% | no prior guidance |
Operating Leverage | FY 2025 | no prior guidance | positive | no prior guidance |
Net Charge-Offs | FY 2025 | no prior guidance | 25 to 35 bps | no prior guidance |
Effective Tax Rate | FY 2025 | no prior guidance | ~19% | no prior guidance |
Average Loan Balances | Q1 2025 | no prior guidance | grow by ~2% | no prior guidance |
Average Deposits | Q1 2025 | no prior guidance | remain relatively stable | no prior guidance |
Net Interest Income | Q1 2025 | no prior guidance | decrease by 2% to 3% | no prior guidance |
Fee Revenues | Q1 2025 | no prior guidance | ~$500 million | no prior guidance |
Expenses | Q1 2025 | no prior guidance | decrease by ~2% from Q4 2024 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Loan growth | Consistent expansion and outperformance; ~3%-6% growth in prior quarters | Strong 5.7% year-over-year in Q4 2024; confident outlook for 2025 | Recurring, remains a bullish focus |
Credit quality / ACL | Stable ~30 bps charge-offs, ACL ~1.9-1.97%; viewed as strong | Net charge-offs steady at 30 bps, ACL at 1.88% | Recurring, sentiment remains bullish |
CRE risk | No mention in Q3 2024 [no mention] | Belief it is close to bottoming out, prepared to increase exposure | Newly positive outlook |
Fee-based revenue | Strong year-over-year growth (~12%), driven by payments and wealth | Record fee revenues at 28% of total; capital markets & wealth lead | Consistent growth, bullish tone |
Merchant acquiring | In-sourcing completed; ~1% addition to overall fee revenue growth | Brought in-house; contributed to 8% year-over-year payments growth | Recurring, positive expansion |
Debit card interchange reform | Cited in Q1 2024 with potential ~$90M impact if enacted | No mention in Q4 2024 | No updates |
Net interest income / net interest margin | Gradual improvement; NIM ~2.98% in Q3 2024, expected to rise in 2025 | NII up 6% year-over-year; NIM at 3.03%, stable outlook for 2025 | Recurring, stable to slightly bullish |
Interest rate sensitivity | Actively reducing asset sensitivity; added swaps to protect margin | Hedging program remains stable; aim for flat NIM in 2025 | Recurring, strategy refined |
Capital adequacy / stress capital buffer | CET1 ~10.4% (Q3), aiming 9-10% adjusted CET1; well-capitalized stance | Stress capital buffer at 2.5%; strong internal stress tests | Recurring, stable stance |
Expense management / net expense growth | ~4.5% full-year 2024, decelerating into Q4; focus on disciplined invests | Guided 3.5%-4.5% in 2025; balancing core reductions with investments | Recurring, disciplined approach |
M&A vs. organic growth | No direct mention in Q3 2024 [no mention] | Priority on organic growth, open to M&A if it “makes sense” | Consistent preference for organic |
Capital markets performance | Strong 50% year-over-year growth in Q3, robust pipeline | Record $120 million in Q4, up 74% year-over-year | Recurring, accelerating |
Regulatory changes | No mention in Q3 2024 [no mention] | Expecting a pro-business orientation; potential Basel III clarity | Newly mentioned |
-
NII Guidance Confidence
Q: How confident are you in NII guidance amid uncertainties?
A: Management expressed strong confidence in achieving the Net Interest Income (NII) growth within their projected range, despite uncertainties in trade, immigration, and tax policy. They believe they can manage Net Interest Margin (NIM) to remain approximately flat in 2025, even with varying interest rate scenarios from no cuts to up to 2 or 3 rate cuts. -
Loan Growth vs Deposit Growth
Q: Why are loans growing faster than deposits in 2025?
A: Loans are projected to grow between 5% to 7%, driven by both core and new initiatives, sustaining current run rates. Deposits are expected to grow 3% to 5%, intentionally slower to manage the loan-to-deposit ratio, which ended Q4 at 79%, allowing flexibility in deposit pricing and supporting NIM. -
Loan Yields on New Production
Q: What are new loan yields versus existing yields?
A: New loans are being produced at yields consistent with overall spreads, supporting a stable NIM. The mix of fixed and variable rate loans is about 50/50, aligning with movements in the yield curve. -
Capital and Share Buybacks
Q: Will you resume share buybacks given capital levels?
A: With a Common Equity Tier 1 (CET1) ratio of 10.5% and adjusted for Accumulated Other Comprehensive Income (AOCI) at 8.7%, the bank aims to reach 9% to 10% adjusted CET1 in the first half of 2025. Due to expected loan growth and capital needs, share repurchases are unlikely in the near term. -
Provisioning Outlook
Q: Will you release or build loan loss reserves in 2025?
A: Management expects the Allowance for Credit Losses (ACL) coverage ratio to potentially decrease over time if the economy performs well, even as loan growth continues. The ACL ratio stood at 1.88%, higher than the CECL day 1 ratio of 1.70%. -
NIM Outlook
Q: What's the NIM outlook for the full year 2025?
A: The bank expects Net Interest Margin (NIM) to remain approximately 3%, flat throughout 2025. Factors include continued benefits from fixed asset repricing (about 10 basis points), decreasing deposit costs, and modest impacts from hedging activities. -
Securities Repositioning
Q: Will you do more securities repositioning?
A: They do not plan significant further repositioning. The recent sale of $1 billion in securities was tactical, optimizing capital and achieving a less than 2-year payback. -
Investment Cycle
Q: Where are you in your investment cycle?
A: The bank continues to invest in core markets, new geographies, and verticals, seeing significant momentum and returns. They are not at the end of the investment cycle and plan to pursue additional opportunities that make sense. -
Potential for M&A
Q: Are you considering acquisitions?
A: While the priority is organic growth, they are open to mergers and acquisitions if opportunities align strategically. They have capacity for bolt-on acquisitions but remain focused on driving top-quartile organic growth. -
Borrower Sentiment
Q: How is borrower sentiment affecting growth?
A: Borrowers are positive post-election, expecting growth in 2025 and beyond. This optimism led to record asset finance in Q4, reflecting increased investments and confidence. -
Fee Income Outlook
Q: What's the outlook for fee income growth?
A: Management expects high single-digit to low double-digit growth in payments, wealth management, and capital markets fees over the long term. Fee strategies support the core business and are driven by both growth and deeper penetration. -
Stress Tests Participation
Q: Will you participate in stress tests to adjust SCB?
A: With a Stress Capital Buffer (SCB) at the minimum 2.5%, they do not plan to participate in voluntary stress tests this year. -
Regulatory Changes
Q: How will new regulatory leadership affect you?
A: The new administration is expected to be pro-business, potentially leading to more stability, less uncertainty on liquidity and capital, and a constructive dialogue with regulators.