Will Loan Growth Support Huntington's (HBAN) Q1 Earnings?
Zacks Investment Research | Apr 22, 2019 09:42PM ET
Huntington Bancshares (NASDAQ:HBAN) is scheduled to report first-quarter 2019 results on Apr 25, before the opening bell. The results are projected to reflect year-over-year growth in revenues and earnings.
In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate. Higher expenses, provisions and lower non-interest income were the key negatives. However, higher net interest income and improvement in loans and deposits were among the positives.
However, Huntington’s activities in the first quarter were inadequate to impress analysts. As a result, the Zacks Consensus Estimate for earnings of 32 cents remained unchanged over the past 30 days. Nonetheless, it indicates growth of 14.3% from the year-ago reported figure.
Moreover, the consensus estimate for revenues of $1.15 billion suggests a rise of 6.5%.
Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to impact first-quarter results.
Factors That Might Influence Q1 Results
Net Interest Income Might Increase Slightly: A decent lending backdrop, particularly in the areas of commercial and industrial, commercial real estate and consumer will offer support to banks’ interest income, while weakness in revolving home equity loans (due to slowdown in originations and refinancing activities) will partially offset this. Nevertheless, flattening and sometimes even inversion of the yield curve during the first quarter, are expected to negatively impact net interest margin.
However, rise in interest earning assets is likely to support top-line growth. The Zacks Consensus Estimate predicts earnings assets of $98.8 billion, up 3.5% year over year.
Fee Income Might Remain Stable: Investment banking is expected to display a disappointing performance due to seasonality and a considerable reduction in equity underwriting volumes on escalating trade-war fears and global economic slowdown.
With the rising interest rates, no major help is expected from the mortgage banking segment. As refinancing activities slowed down during the quarter, mortgage banking revenues are not likely to witness much improvement.
Nevertheless, given the continued momentum in customer spending, the usage of credit and debit cards is likely to have helped the company record higher related fees.
Expenses Under Control: Management remains focused on expense management, Also, there were no major outflows during the quarter that might have impacted the firm’s earnings unusually in the to-be-reported quarter.
Here is what our quantitative model predicts:
Huntington doesn’t have the right combination of the two key ingredients — positive Earnings ESP Filter .
Earnings ESP: The company has an Earnings ESP of -1.27%.
Zacks Rank: It carries a Zacks Rank #3.
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