Huntington Bancshares Inc. expects its net interest margin to reach a cyclical low by year-end 2019 and start to rebound in 2020.
CFO Howell McCullough III delivered the updated guidance on Sept. 9 at the Barclays Global Financial Services Conference. He reiterated previous guidance for 2019 full-year NIM to come in at 3.25% to 3.30%, compared to 3.33% for full year 2018. Looking ahead, McCullough said the bank's margin could start to move higher at some point in 2020.
"Looking further out, our current modeling suggests that NIM will bottom out later this year before beginning to work higher in 2020," McCullough said.
During a question-and-answer session, Barclays analyst Jason Goldberg asked for more detail on McCullough's NIM confidence, considering long-term rates have dropped since Huntington issued its previous guidance.
"I think the biggest piece of it has to be the opportunity to reprice deposits here in the third and fourth quarters," McCullough said. He said the bank has $8 billion of repricing opportunity due to maturing certificates of deposit and money market special rates that are expiring. Further, he said the bank has remained disciplined on asset pricing.
For full year 2019, McCullough said the bank expects to hit the middle range of previously issued guidance on several metrics such as revenue, NIM and deposit growth. One area that fell outside the midpoint was loan growth, where McCullough said the bank foresees hitting the lower end of previous guidance of 4% to 5% year-over-year loan growth.
