Huntington Bancshares beats profit estimates, says interest income to grow

(Reuters) -Huntington Bancshares posted a drop in first-quarter profit on Friday on lower interest income but still beat analysts' estimates, sending its shares up about 1%.

Regional banks have been offering higher returns on deposits to prevent customers from fleeing to a higher yielding alternatives.

Net interest income, the difference between what banks pay customers on deposits and earn as interest on loans, declined 8.3% to $1.3 billion in the three months ended March 31, Huntington said.

"We expect our net interest income will grow in the second quarter and then continuing to grow in the second half," said Stephen Steinour, CEO of Huntington.

"Our loan portfolio, we expect to grow - we've got a very strong pipeline of commercial banking activity and a good pipeline on the consumer side," he added.

The high interest-rate environment, however, has squeezed the finances of borrowers, resulting in banks allocating more capital for potential loan defaults.

Provision for credit losses at Huntington grew nearly 26% to $107 million.

The lender's adjusted quarterly profit came in at 28 cents per share, compared with analysts' estimates of 25 cents per share, according to LSEG.

The bank also incurred an expense of $32 million related to the additional special assessment that it had to pay to replenish Federal Deposit Insurance Corp's deposit insurance fund.

(Reporting by Sri Hari N S, Jaiveer Shekhawat in Bengaluru and Saeed Azhar in New York; Editing by Maju Samuel)