(Reuters) -Regional lender Huntington Bancshares on Friday raised its annual interest income forecast, betting on robust loan growth and lower deposit costs.
The Columbus, Ohio-based Huntington has delivered strong growth in its core businesses and expanded to North and South Carolinas and Texas in recent years, despite high interest rates squeezing loan demand for regional banks.
Rate cuts by the U.S. Federal Reserve last year have also allowed banks to reduce deposit costs.
The bank now expects net interest income (NII) – the difference between what it earns on loans and pays out on deposits – to grow between 8% and 9% in 2025, compared with its prior forecast of 5% and 7% rise.
Annual loan growth is expected between 6% and 8%, higher than its prior forecast of 5% to 7% rise.
NII jumped 12% to $1.47 billion in the second quarter, putting the bank on track for a record full-year interest income. Average total loans and leases grew $9.8 billion from the year-ago quarter.
Huntington’s profit per share rose to 34 cents in the quarter ending June 30, from 30 cents a year earlier.
On Monday, Huntington struck a $1.9 billion deal for rival Veritex, furthering its Texas push.
BOND PORTFOLIO REJIG
Months after a similar move, Huntington rejigged a portion of its securities portfolio to boost profits, as banks increasingly dump lower-yielding securities.
Huntington sold $900 million of corporate bonds in the quarter and reinvested proceeds into higher-yielding securities, resulting in a pre-tax loss of $58 million.
The rejig is expected to boost revenue and interest margin in the second half of the year and into 2026, with Huntington picking up about 340 basis points of yield on the trade.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Leroy Leo and Sahal Muhammed)
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