Huntington Bancshares (HBAN) Q2 2025 Earnings: Sustainable Growth or Temporary Rally?

Huntington Bancshares (HBAN) has emerged as a standout performer in the regional banking sector, with its stock rising 29.9% over the past year. But as the company prepares to report Q2 2025 earnings, investors are asking a critical question: Is this outperformance rooted in durable fundamentals, or is it a fleeting response to macroeconomic tailwinds? This analysis evaluates HBAN's earnings trajectory, balance sheet resilience, and valuation multiples relative to peers to answer that question.

Core Strengths in Q1 2025 Earnings: A Blueprint for Growth

Huntington's Q1 2025 results were a masterclass in leveraging structural advantages. Total revenue rose 9.5% year-over-year to $1.9 billion, driven by a 10.8% jump in net interest income (NII) to $1.4 billion. The net interest margin (NIM) expanded to 3.10%, up 9 basis points (bps) from 2024, reflecting disciplined loan pricing and deposit cost management. This outperformance isn't a fluke—HBAN has beaten earnings estimates for four consecutive quarters, with Q1 EPS of $0.34 exceeding expectations by 9.7%.

While Q2 2025 estimates are more muted (analysts project $0.30 EPS, a 6.7% sequential dip from Q1's $0.34), the trendline remains positive. Full-year 2025 EPS is expected to grow 16.1% to $1.44, with further expansion to $1.58 in 2026. The key question is whether this growth is sustainable amid rising macro risks.

Balance Sheet Resilience: Credit Metrics and Deposit Growth

HBAN's balance sheet remains a fortress. Loan growth in Q1 accelerated to 7% year-over-year, with commercial and industrial loans leading the charge. Deposits grew 7% YoY, providing ample funding at lower costs—interest-bearing deposits now represent 69% of total deposits, up from 65% in 2024. This mix reduces reliance on costlier wholesale funding.

On the credit front, non-performing loans (NPLs) dipped to 0.56% of total loans, while net charge-offs (NCOs) stabilized at 0.26%, well below historical averages. The allowance for credit losses (ACL) stands at 1.87% of loans, offering a robust buffer. Unlike some peers, HBAN's credit quality isn't showing cracks, even as regional banks face headwinds from slowing commercial activity.

Valuation: Undervalued Relative to Peers

HBAN trades at a P/B of 0.97x and a P/E of 9.8x, both below the median for regional banks (1.2x P/B and 12x P/E). This discount persists despite Huntington's strong capital ratios (CET1 at 10.6%) and superior efficiency (58.9% efficiency ratio vs. 63% for peers).

Analysts highlight this valuation gap as a buying opportunity. The mean price target of $17.90 implies a 7.8% upside, while bulls argue that HBAN's organic growth and disciplined capital management warrant a re-rating.

Peer Comparison: HBAN vs. KeyCorp and Fifth Third

HBAN's performance stands out against regional peers:
- KeyCorp (KEY): Lower NIM (2.75%) and weaker loan growth (3% YoY).
- Fifth Third (FITB): Higher NPL ratio (0.85%) and slower deposit growth (5% YoY).

Huntington's 13-state footprint and focus on mid-market commercial lending give it a competitive edge. Unlike national banks, HBAN avoids the risks of volatile trading revenue, relying instead on steady net interest income.

Near-Term Risks: Rate Cuts and Economic Uncertainty

The Fed's pause on rate hikes and potential cuts later this year could pressure NIMs. Huntington's management has mitigated this by extending loan maturities and hedging strategies, but a prolonged economic slowdown could strain credit quality.

Investment Recommendation: Buy with a 12-Month Target of $18.50

Rating: Buy
- Upside Catalysts: Sustained loan growth, margin stability, and valuation re-rating.
- Downside Risks: Fed rate cuts exceeding expectations, rising credit losses.

Huntington's combination of strong credit metrics, deposit franchise, and attractive valuation makes it a compelling buy. While macro risks exist, HBAN's defensive profile and consistent execution suggest it can navigate them better than peers. The $18.50 price target reflects a 10% premium to the current consensus, assuming earnings beat expectations in H2 2025.

In conclusion, Huntington Bancshares is more than a temporary rally story—it's a regional banking leader with durable strengths. For long-term investors seeking stability in an uncertain market, HBAN offers a favorable risk-reward profile.

Disclosure: This analysis is for informational purposes only and not personalized investment advice.