Huntington Bancshares beats profit estimates on capital markets strength

(Reuters) - Huntington Bancshares' third-quarter profit beat expectations on Thursday, as higher underwriting and wealth management fees offset a hit from bigger deposit costs.

The bank has diversified beyond lending into fee-earning businesses - a strategy that paid off as companies actively sold stocks and bonds and pursued deals, driving up the fee that banks charge for these transactions.

Capital markets and advisory fees jumped 50%, while wealth and asset management revenue rose 18%, Huntington said.

Net interest income (NII) - the spread between earnings on loans and deposit costs - dipped 1% to $1.35 billion, but was 3% higher than the second quarter.

Banks have been paying more interest on deposits to prevent customers from fleeing to higher-yielding alternatives.

Provision for credit losses rose 7%, reaffirming a trend that was also seen in reports from big banks as consumers exhaust their savings built up during the pandemic.

Huntington forecast fourth-quarter NII to be flat or up 1% from last year. Analysts polled by LSEG had expected a rise of 3.9%.

But CEO Steve Steinour expressed optimism about next year.

"Loan pipelines are robust as we enter the fourth quarter, and we believe this growth momentum establishes a foundation for growing revenue and expanded profitability heading into 2025," Steinour said.

Profit fell 5.5% to $517 million, or 33 cents per share, for the three months ended Sept. 30, compared with expectations of 30 cents.

Shares fell 1.6% before the bell. They have gained 24.5% this year, underperforming the S&P 500 banks index's 27.7% jump.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)