Dive Brief:

• Columbus, Ohio-based Huntington Bancshares will aim to keep the rate of growth of its expenses low as well as take other steps to position itself for what it anticipates will be a mild recession in 2023, bank executives said Friday during the regional bank’s fourth quarter and full year 2022 earnings call.
• The bank is expecting to keep its expense growth rate between 2-4% in 2023, CFO Zach Wasserman said in an interview. It will also be conducting some measure of organizational restructuring, Wasserman said, which the bank does expect to result in a “modest net reduction focused on the more senior level,” he said.
• “We do believe there will be some degree of restructuring and role reduction within the middle to senior management layers in particular within the company,” Wasserman said of the bank’s restructuring plans.

Dive Insight:

While the bank’s baseline outlook does assume a recession, it also assumes the full year will end with modest growth and with inflation gradually subsiding. “The consensus outlook and I think other indicators … tend to point to … a relatively mild recession,” Wasserman said.

The finance chief has served as the bank’s CFO for three years beginning in October 2019, according to his LinkedIn profile.

Huntington — one of the U.S.’s largest regional banks with $183 billion in assets — reported record full-year revenue of $3.2 billion, an 88% increase from the prior year, according to its earnings results, while full-year net income rose 73% to $2.2 billion.

Huntington has been “positioning the company for a number of quarters” to ensure it has strong capital, Wasserman said, as well as ensuring it has a strong credit reserve and that its overall loan portfolio is “really high quality.”

The bank is still finalizing the changes it will make in terms of its organization restructuring, Wasserman said, which will include a voluntary retirement program it will implement within 2023’s first quarter.

CEO Steve Steinour also noted during the earnings call that the economic environment has become “increasingly challenging,” but also said Huntington “is better positioned today than at any time since I joined over a dozen years ago,” he said.

Huntington’s anticipation of recession follows lukewarm earnings at several other banks: Ongoing economic headwinds impacted earnings at Morgan Stanley, though it exceeded analyst forecasts, with the bank reporting a 12% drop in revenue year-over-year with full year net revenue of $53.7 billion for 2022 compared with $59.8 billion the year prior, according to its fourth quarter and full year earnings results published Tuesday.

Goldman Sachs, meanwhile, reported its largest earnings miss in over a decade on its fourth quarter earnings call Tuesday. The bank reported revenue of $10.6 billion for its fourth quarter, a 16% decrease year-over-year, according to its earnings results. Investment banking fees also plunged 48% year-over-year, due to slumping merger and acquisition transactions, per its Tuesday results.

The bank’s results come in a “challenging economic environment,” Goldman CEO David Solomon said Tuesday.