(Reuters) – Huntington Bancshares Inc on Thursday reported a first-quarter profit that narrowly beat analysts’ estimates, as a boost from higher interest rates offset a hit from bigger provisions.
A surge in banks’ net interest income (NII), helped by the Federal Reserve’s aggressive rate hikes to curb decades-high inflation, is helping the lenders navigate a tough environment after a crisis engulfed the sector last month.
Huntington, which is among the 20 biggest banks by assets in the United States, recorded a 23% jump in NII in the three months ended March 31 from a year earlier, while its credit loss provisions rose to $85 million from $25 million.
Average total deposits – a key area of focus for investors this quarter after a flight of deposits led to the collapse of two mid-sized lenders last month – increased $472 million from the prior quarter.
Meanwhile, most mid-sized banks reported a decline in first-quarter deposits as clients sought higher returns in other assets.
In a note earlier this month, analysts at Goldman Sachs said near-term stress on the banking system had subsided and deposit outflows were decelerating.
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But JPMorgan Chase & Co Chief Executive Officer Jamie Dimon warned in his annual letter to shareholders that the turmoil was not over and the repercussions would be felt for years.
Excluding one-time costs, Huntington earned 38 cents per share in the reported quarter, compared with Wall Street estimates of 37 cents per share.
(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)