Huntington Bancshares (HBAN) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Credit performance and consumer trends

• Net charge-off rate declined by 30 basis points, with delinquencies also trending lower, supporting expectations for lower losses in the second half of the year compared to the first half.

• Consumer spending is flat year-over-year, with a shift from discretionary to non-discretionary items and a slowdown in payment rates, but no signs of significant consumer distress.

• Non-prime consumers show more pressure on average transaction value, while prime and higher credit segments remain stable and are driving economic activity.

• Key metrics monitored include purchase behavior, payment rates, and entry rates, all of which remain consistent with pre-pandemic trends.

• Inflation's impact is seen in consumers maintaining flat transaction sizes by reducing basket contents, with cost-of-living pressures persisting in areas like housing and insurance.

Reserve, loss outlook, and vintage performance

• Reserve ratio is expected to remain flat through the year, with future declines dependent on loss rate improvements and credit normalization.

• No portfolio concerns prevent a return to pre-pandemic CECL reserve levels, with assumptions unchanged.

• Industry-wide, post-pandemic vintages are underperforming compared to pre-pandemic, but current vintages are only slightly worse and within expected ranges.

Regulatory and late fee developments

• Ongoing litigation over the CFPB late fee rule is expected to see developments in the coming weeks, with most pricing and policy changes already implemented and effects to be seen in Q3 and Q4.

• Over 60% of planned pricing changes are complete, with customer response and operational metrics being closely tracked.

• Initial customer response to APR and paper statement fee changes has been positive, with increased adoption of e-billing and no significant negative impact observed.

• No major underwriting changes have been made in response to late fee uncertainty, with a focus on maintaining ROA neutrality and sales levels.