Banks Financials‘ Finest list: Removing HBAN following our downgrade to Equal-weight, replacing with CFG

Research evidence excerpt

Banks Financials‘ Finest list: Removing HBAN following our downgrade to Equal-weight, replacing with CFG

Idea

July 27, 2026 07:40 PM GMT

Morgan Stanley & Co. LLCMBanks | North America Betsy L. Graseck, CFA

Equity Analyst

Banks Financials’ Finest list: Betsy.Graseck@morganstanley.comManan Gosalia +1 212 761-8473

Manan.Gosalia@morganstanley.com +1 212 761-4092

Removing HBAN following our Brian Wilczynski, CFA

Brian.Wilczynski@morganstanley.com +1 212 761-1084

downgrade to Equal-weight, Ben Bayanfar

Research Associate

Ben.Bayanfar@morganstanley.com +1 212 761-0649

replacing with CFG

We are removing HBAN from our Banks Financials’ Finest list

following our downgrade to Equal-weight post 2Q results, and

adding CFG to the list.

Removing HBAN from Banks Financials' Finest list:

Huntington Bancshares (HBAN.O)

• We downgraded HBAN to Equal-weight following the company's 2Q26

earnings result.

• A second straight NII/NIM miss and a full-year guidance cut suggest that

deposit competition is intensifying faster than we expected coming into the

year.

• We are modeling further pressure on net interest margin driven by higher

deposit costs, leaving us below the company's net interest income / revenue

outlook for 2026 / 2027. Our 2027E EPS of $1.80 is also below the

company's $1.90-1.93 target.

• While the stock does not seem overpriced at 10x our 2027 EPS, we see a

more balanced risk reward with limited upside near term until Street

estimates de-risk.

Adding CFG to Banks Financials' Finest list:

Citizens Financial Group (CFG.N)

CFG is a profitability improvement story with multiple ways to win.

• We model ROTCE increasing from 13.9% in 2Q26 to 16.5% by the end of

2027, supported by net interest margin expansion, improving credit, and

higher capital return.