All right. Good morning. I'm Manan Gosalia, the Mid-Cap Banks Analyst here at Morgan Stanley. On behalf of the entire MS Financials team, I'd like to welcome you all to the 15th Annual Morgan Stanley Financials Conference. We've got a great lineup today. Over the next three days, we have 161 companies in attendance. Kicking off our conference again this time, I'm delighted to have with us today Huntington's Chief Financial Officer, Zach Wasserman. Zach, before I hand it over to you, I'm going to read a quick disclosure. That is, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, Zach, thanks so much for joining us.
I'll pass it on to you for prepared remarks, then we'll dig into Q&A.
Sounds good, Manan. Thank you. Well, good morning. Thanks, Manan, and to Morgan Stanley for hosting us today. We welcome everyone here today and also listening on the webcast. We appreciate your interest in Huntington, and we're pleased to share an update on our recent business trends and select new initiatives. Following my brief presentation, I'll turn it back over to Manan for Q&A. Before we get started, please review slide two, which applies to the forward-looking statements we'll be making today. Starting on slide three, Huntington continues to demonstrate our strength and resiliency through the cycle, even as external factors, including the path of interest rates and a sustained inverted yield curve, continue to provide a dynamic environment for the industry.
Our successes would not be possible without the dedication of our nearly 20,000 colleagues who live our purpose every day as they serve customers across the bank with extraordinary commitment. Turning to slide four, there are six key messages we want to share with you today. First, we continue to operate from a position of strength and are leveraging our strong capital and liquidity levels to support our differentiated growth outlook. This strength has enabled us to accelerate the execution of many of our strategic initiatives. Second, we are driving sustained organic deposit and loan growth. This will support the expansion of net interest income over the course of this year and position us very well to start and enter 2025. The drivers of this growth continue to be a balance between our new teams and new geographies, as well as our existing core footprint and businesses.
Third, we are sustaining investment in revenue growth initiatives, expanding teams in our new geographic regions, and adding talented colleagues in new commercial specialty verticals. The strength of the balance sheet, coupled with our growth posture, continues to resonate in the market with experienced bankers. Just recently, we added a highly experienced team focused on deposits within the mortgage servicing area, and we announced the formation of an additional national commercial deposits team focused on title, escrow, and HOA. Fourth, we are accelerating fee revenue streams over the course of the year and continuing to invest to further augment our enterprise payments capabilities. One example of this is our merchant acquiring platform, which we are bringing in-house in the second half of this year in order to accelerate the revenue growth of this high-value payments offering.
Fifth, credit continues to perform exceptionally well, tracking in line with our expectations for the year. Finally, we're dynamically managing through the interest rate environment and are powering earnings expansion into 2025, which we expect to do in a variety of interest rate scenarios. Turning to slide five, we are in this position of strength due to our intentional actions over many years to ensure sustained risk management in these key areas. Our capital, inclusive of AOCI, is robust, and our credit performance continues to produce top-quartile results. Our allowance for credit losses is also well above peer levels. Deposit growth has outperformed peers consistently and considerably over the past two-plus years. And our liquidity as a percent of uninsured deposits is at the top of the peer group at over 200%. Turning to slide six, loan growth is trending higher as we expected.
Second quarter average loan balances through May have increased by $1.2 billion compared to the first quarter. On a cumulative basis over the last year, Huntington has consistently expanded loan balances against a backdrop of peers with shrinking loan balances. We continue to see solid momentum and pipelines which we expect to support accelerated loan growth outlook as we move into the second half of the year. As an example, late-stage commercial loan pipelines are 13% higher at the end of May compared to the end of the first quarter. As we move into the third and fourth quarters, we expect the year-over-year pace of loan growth to accelerate from the 1.3% year-over-year growth rates we saw in the first quarter, reaching 5%+ year-over-year growth by the fourth quarter.
The new geographic markets and commercial specialty verticals will be key contributors to this accelerated loan growth outlook, and we expect them to be increasingly additive over the course of the year. We're also seeing acceleration of loan growth in our other core businesses, notably business banking, middle market, and our legacy commercial specialty verticals. We are also seeing higher payoffs and paydowns within commercial real estate than we had planned, which at the margin is creating a headwind to total loan growth, but also improves overall asset quality. The net result of this sequential growth likely puts loan growth between 3% and 4% on a full-year basis, exceeding the year with a 5%+ year-over-year growth rate. Turning to slide seven, we continue to see strong momentum in deposit gathering with a well-managed beta. Through May, total average deposits have increased over $2 billion.
We expect this sustained deposit growth to continue over the course of the second half of the year and drive full-year deposit growth to the top end of our guidance range between 3% and 4%. We have intentionally positioned ourselves to sustain robust deposit growth as we move throughout 2024. We believe pulling forward strong core deposits is an appropriate action given potential second-half events, including the upcoming election. And we intend to set up strong funding capacity to support further acceleration of loan growth into 2025. At the margin, deposits and funding costs are somewhat higher than we would have expected earlier in the year in January, given the sustained higher-for-longer rate environment, as well as our posture to accelerate incremental deposit growth.
We're balancing our intent to grow core deposit funding while also beginning to make selective changes in our pricing strategies aligned with down beta management and that playbook. At the end of the day, we continue to see strong marginal returns for both deposit funding and associated loan growth that it supports. We like our position to be able to self-fund high-quality loan growth with core deposit funding. Turning to slide eight, the path of net interest income will be a direct result of the two dynamics I mentioned earlier: sustained loan growth and core deposit gathering activities. We see a sequential trajectory for net interest income on a dollar basis to grow modestly in the second quarter and then trending higher yet into the third and fourth quarters.
Net interest margin we expect will come in around the level we saw in the first quarter, ±5 basis points over the coming quarters in 2024. This outlook reflects my earlier comments for somewhat higher funding costs, given our deposit growth dynamics, and continues to benefit from fixed asset repricing opportunities over the course of the year. Clearly, the sector has been awaiting a reversal of the trend of declining spread revenue dollars from the Q1 2023 peak earlier in the rate cycle. When you pull back, Huntington has delivered results near the top of the peer group and proactively managing net interest income revenues over the past year, as you can see from the top right of this slide.
These results reflect the intentional strategy we have pursued, delivering high-return loan growth supported by our strong balance sheet and robust capital position, funded through a granular and diversified core deposit base and reflective of our dynamic balance sheet management and hedging program. As we begin to deliver sequential growth of net interest income dollars and accelerate in the second half of the year, the setup for 2025 is attractive, with revenue dollar growth continuing into the new year. Turning to slide nine , as I mentioned, credit is performing exceptionally well. Net charge-offs continue to be below the peer median level. Our outlook for the full year is for relative stability of net charge-offs within our prior 2024 guidance of 25-35 basis points. Turning to slide 10, as we have shared, we are seizing opportunities to accelerate our strategic growth initiatives.
Over the past year, we've added new geographies to the commercial and regional bank, as well as added new commercial specialty verticals. In all of these areas, we are targeting full banking relationships with loan and deposits, as well as value-added fee business from capital markets and payments. In the Carolinas, we now have more than 50 new bankers across our 5 regional centers in North and South Carolina. In Texas, we've assembled a middle market team based in Dallas. In the specialty verticals, Funds Finance, which launched nearly one year ago, is doing exceptionally well in tracking at or even above our expectations, with continued opportunity over the coming years. Healthcare Asset-Based Lending has hit the ground running, with new relationships added, and we've closed transactions already, also in the Native American Financial Service area as well. In all three new verticals, we're seeing strong traction and growth momentum.
As a reminder, back at our investor day in late 2022, we shared our strategic objective to add at least one to two new specialty verticals each year. In 2023, we added three, and in the first five months of this year, we've added two. Additionally, today, I want to spend a moment on the two new verticals we have just launched, focusing on national deposit gathering, mortgage service deposits, and HOA, title, and escrow. On Slide 11, you can see that both of these teams provide Huntington with a significant deposit gathering opportunity over time. Both of these areas reflect our approach to leverage expertise within the commercial bank to serve targeted customer segments.
The mortgage servicing deposit team is well known to many of you, and we believe in the medium term over the next three to five years, this group can generate upwards of $5 billion of deposits. Pipelines are already building, and we see near-term opportunity for a handful of early customer relationship adds. The HOA, title, and escrow deposit space is one where we have spent considerable time looking to enhance our capabilities. We announced late last week the leader we hired to build out this group, who has considerable experience. Here again, we believe this could be a $5 billion deposit growth opportunity for us over the medium term. Both of these groups will operate on a national basis and leverage their expertise and deep customer relationships built over many years.
Turning to slide 12, we're focused on driving fee revenues primarily from our three strategic areas of focus: capital markets, payments, and wealth management. Within capital markets, we expect to see sequential increases in revenues quarterly in the second quarter and continuing over the second half of the year. Within wealth management, our efforts to increase advisory household penetration are working well, with advisory households growing by 8% year-over-year, driving strong assets under management and revenue growth. On the payments business, we are an at-scale player in both card and treasury management, serving the needs of customers across consumer banking, business banking, and commercial segments. Over the last two years, we've launched numerous initiatives to continue to power growth in the payments area, starting with establishing a dedicated payments organization to double down on our commitment to driving the strategic area and its associated fee revenue opportunities.
In 2022, we acquired business-to-consumer payment capabilities through Torana, now Huntington ChoicePay. We have continued to bolster our card offerings, launching a cashback credit card as well as a secured card product. We've made significant investments into our commercial treasury management business with enhanced APIs and support infrastructure that is driving strong customer penetration and revenue growth. Today, I want to share with you more about the key expansion and one another key expansion initiative, bringing our merchant acquiring business in-house. Slide 13 details our prior model and shows the enhanced capabilities from the new model. By bringing this in-house, it allows us to much more powerfully integrate this key payments offering into our core banking product set, as well as integrate the sales and servicing into our own owned channels.
This also positions Huntington for the future as it enables numerous embedded lending and embedded payments offerings over time. We expect to double customer penetration over the next five years, and we expect to double revenues from this business into 2025 with more than four times current revenues over the next five years. This equates to approximately $25 million of additional annual revenue for the next 12 months. This will carry some incremental expenses as we bring this business in-house. We expect this business to operate with an efficiency ratio between 40%-50%, with the revenue and expenses layering in during the third quarter. Turning to slide 14, I'll summarize our updated outlook for the full year. We now expect loans to increase between 3%-4%, as I mentioned earlier, exiting in the year at over 5% year-over-year growth.
As I noted, we're front-loading deposit growth, and deposits are growing at the top end of our prior guidance between 3% and 4%, driven by our sustained deposit gathering activities. Net interest income on a full-year basis we see coming in between down 1% and down 4%. This change is primarily driven by both lower loan growth as we focus on maintaining high marginal returns, as well as somewhat higher funding costs associated with the robust deposit growth. This assumes loan growth within the range I mentioned, as well as net interest margin relatively stable from the first quarter level over the course of the year. As noted, we expect sequential increase in dollar revenues from the first quarter. Fee revenue guidance is unchanged, and we continue to see it growing between 5% and 7% on a full-year basis. Our outlook for core expenses remains unchanged at approximately 4.5%.
There may be some variability here quarter to quarter, given the level of revenue-driven compensation, but exit growth trajectory will be in the low single digits by the fourth quarter. As I noted, we expect to incur some additional expenses related to the merchant acquiring model change that will be covered by revenues. We expect this will add approximately $10 million of expenses in the second half of the year, a level within the reasonable range of variability in our full-year total expense forecast. Credit and charge-offs are tracking in line with expectations. In closing, our outlook is expected to result in improving profitability trends over the course of the year. Revenue growth will accelerate, expense growth will decelerate, driving strong acceleration of year-over-year profit growth. The net result is PP&R expected to end the year well above prior levels and setting up further growth into 2025.
Thank you, and we'll now turn it back to Manan for the Q&A portion.
Thanks so much, Zach. I want to dig into some of the new NII and loan growth guide, but maybe before that, you've spoken about expanding into these new geographies like the Carolinas and Texas, and also doing new verticals like fund banking, healthcare ABL, Native American financing. What makes these markets and verticals attractive, and why is now the time to get into these?
Yeah, that's a great question. We are continually looking at our capital allocation and the allocation of our internal investment capacity to ensure it's allocated and focused on the areas where we think we've got the strongest long-term growth, including exposure to economic growth, the ability to generate top-tier returns, and ultimately to really have a differentiated offering and win in the marketplace.
And so these areas, these commercial specialty areas and these geographic expansion areas, have been on our radar screen for some time to potentially increase our exposure to. In the Carolinas and Texas, we've actually been operating in those markets, supporting national customers in our national commercial business for more than a decade. We've got $3 billion or $4 billion of loans in each of those markets and many colleagues who are already focused there. So we knew the markets, but the condition that was present now was really based on the differentiated position that Huntington is in right now, operating from a position of strength, leaning into growth as opposed to pulling back on growth, and really with the kind of funding and momentum to support that, which is attracting now very strong talent, banking talent.
These are bankers in each of these areas that are deeply experienced, dozens of years of experience that enables us to have strong confidence that they'll be able to deliver. So the goal is to launch into the two geographic areas in a commercial basis, capturing full relationships, relatively low investment, quick speed to profitability, and in the specialty verticals, a similar orientation. As I noted in the prepared remarks, expect them to be meaningful contributors to loan and deposit growth this year and already achieving a lot of the early milestones that we would expect.
And in addition to bringing loans and deposits, is there the ability to also bring in some fees associated with these new verticals?
There absolutely are. We're certainly orienting to that way.
I think the goal on the deposit side is always penetrate core primary bank operating accounts that come with treasury management activities and that value-added service. And over time, particularly as we do the commercial loan production, there'll be follow-on capital markets opportunities like debt syndication, interest rate swap services, and things of that nature as well. So expecting fee businesses and, of course, the deposit and loan volumes to come along with that as well.
Great. And maybe now to dig into some of your comments on the NII side. To start, can you talk about the rate environment that's embedded into that NII guide? I know at earnings, you spoke about the high end being at about 0 cuts and the low end being at about three cuts. Can you talk about what the new guide is?
We continue to forecast a variety of interest rate scenarios in order to understand the implications of the business and ensure that we're well managed under whatever scenario we think is the most likely. The middle range of that, that is really the product of our guidance, is the forward curve at the high end, which as of now assumes one cut at some point in the fourth quarter, and then I think it's two or three cuts into 2024, and then a higher-for-longer scenario that has no cut in 2024, not until, let's say, the late spring of 2025, and then a couple more cuts into 2025. So that's the sort of cone of uncertainty we're looking at, and we think our guidance is relevant under both of those scenarios.
Got it. Okay, perfect.
I think you've also mentioned that the belly of the curve matters for NII as well. What are you thinking there?
Yeah. So look, the reasonable range of interest rates that really drives our business is the three-month to the five-year, the real belly of the curve. And what we're seeing is that is clearly at a higher-for-longer level. There are positives and some challenges from that, clearly. The biggest positives with respect to our NIM at this point is the fixed asset repricing. We've talked about $4 billion a quarter coming up, which is relative to the yields on the loans that are paying down versus the newly originated loans in that category.
We're seeing between 250-300 basis points yield improvement, which is driving in our full-year NIM about 10-12 basis points of benefit this year, and that should continue out into 2025 and even into 2026. There's also a somewhat tactical benefit that we're seeing in our NIM this year of the hedge drag in the first quarter, which was 17 basis points, reducing by between 5-8 basis points as we go throughout the course of this year and continuing to reduce down to roughly zero by the middle of next year. So those are the two biggest benefits to NIM as we go into this rate environment. Clearly, the challenge is the inverted yield curve.
I've seen some statistics recently that depending on which yield curve metrics you look at, this is either the 40 years or 60 years since we've seen a yield curve as inverted as this. And so it's clearly an extraordinary environment. And so there will be some incremental funding costs over and above our initial budgeting. With that being said, from our perspective, what's critical is really what is the return on the incremental asset and loan production. We generated a 15% return on capital in the first quarter on ROTCE, and we're seeing that same level of solid returns at the margin at this point. So being dynamic, really actively modulating where and how we're generating loan growth and deposit growth, but really all with a mind toward driving revenue growth out of the first quarter to see that accelerate and continue out into 2025.
While we're on the topic of the hedge protection, at earnings, you spoke about adding more downside protection to NII over time. Have you added more swaps in Q2, and can you comment on the cost of adding swaps in this environment?
Sure. That's a great question. As of the remainder of Q2 subsequent to our earnings call in April, we have not added any additional hedges. We're continuing to be very dynamic in looking at the marketplace. Generally speaking, our balance sheet positioning is the following. We're modestly asset-sensitive. We've kept that position intentionally to capture the benefit of the higher-for-longer rate environment, and it's worked quite well, as you saw from some of the information in the prepared remarks. As we go forward, we intend to gradually reduce our asset sensitivity by roughly a quarter to a third by the end of 2025.
That's already baked into the hedging and swap plan that we shared at our last earnings call, with gradually increasing receive-fixed swaps on a forward-starting basis in the early to middle part of next year and gradually allowing expiration of our pay-fixed swaps in a similar timeframe. We'll be dynamic in looking at this, but at this point, based on what's already baked into the forward yield curve for rate reductions, we think we've got the balance sheet positioning about right, and we'll continue to monitor as new data and trends emerge.
Great. Then moving on to loan growth, can you talk about what are you hearing from borrowers? You spoke about solid momentum. You spoke about the late-stage commercial loan pipeline being up pretty significantly.
Can you talk about what sentiment you're hearing from borrowers in the macro environment and what would drive them to lean in more in this kind of an environment?
Broadly speaking, we continue to see our corporate and consumer customers seeing that the economy is growing, and there are opportunities for them to grow their businesses and to grow their business with us. And importantly, notably, we are benefiting from the unique growth opportunities that we're leaning into as well. And as I think I mentioned, roughly 40% of our loan growth this year we expect to come from the new verticals, the new geographic expansion. So we're seeing opportunities both in the core and in the new areas. What I would note is also a couple of things.
One is, I think, if there's any uncertainty, clearly when and if there'll be rate reductions and just sort of the cumulative pressure on an interest rate environment is challenging. I'm not blunting our net growth, but certainly at the margin, it's on customers' minds. There's also some degree of consideration that the fourth quarter of this year, when the election finally concludes, could represent some amount of activity here in the world and the economy that could be somewhat of a challenge to economic growth. With that being said, generally fairly sanguine view from the customer set. The other thing I would say is our core Midwest markets are growing very, very strongly. There's a considerable amount of industrial and commercial investment now coming into the Midwest.
Just our headquarter town of Columbus, Ohio, was noted as one of the, if not the fastest growing city in the country in the second half of last year. So we're seeing a robust business investment environment generally in the Midwest, which I think is certainly supporting our growth outlook as well.
So you pointed to the uncertainty from the elections as well. Is that part of what's driving the slight decrease in the loan growth guide from 3%-5% to 3%-4%?
Yeah. Really two things that we're thinking about as we calibrate loan growth. One is we are seeing a higher degree of commercial real estate payoffs and paydowns than we would have expected at the beginning of the year. That's about half of the reduction in loan growth outlook. Over time, there will be an opportunity to continue to produce and lean into CRE.
Now is not that time yet, and so I expect to see a continued modest drawdown in CRE over the next few quarters. The other thing is really just being dynamic to calibrate loan growth, cognizant of the funding cost environment, the continued inverted yield curve, to make sure that the incremental loan production and asset growth is really driving a high return, as I mentioned just a few minutes ago. Continue to have strong confidence in that. And ultimately, focused on driving spread revenues higher here and have good confidence that we'll see that grow into the second quarter and then continue on into the third and fourth, as I mentioned.
Then maybe moving on to deposits. You spoke about how deposits were up $2.3 billion quarter to date. I think loans were up $1.2 billion, so you're clearly growing deposits at a faster clip than loans.
Can you talk about the rationale behind that? Are you trying to pre-fund some of the loan growth coming up?
Yeah. So to some degree, the answer is yes. We are looking to pre-fund some of the loan growth, continue to support a strong loan-to-deposit ratio, robust levels of liquidity as we get into the back half of this year to the extent that the world is a little turbulent in the fourth quarter. That'll be helpful. But more importantly, our expectation is we'll see accelerating loan growth throughout the course of this year. I mean, we're effectively already operating at a +5% annualized loan growth run rate right now, and I expect that will drive year-over-year reported loan growth of +5% by the fourth quarter. And our general assumption at this point, our working long-range forecast, is we'll see further acceleration out into 2025.
So setting that up with good core funding now and, of course, benefiting from some of these national deposit teams that are coming on board will really help us as well there.
And can you expand a little bit on what you're seeing on the deposit cost front right now in terms of deposit competition from others, as well as what you're seeing in your specific markets?
Sure. It's sort of an interesting thing if you take a step back and you think about how the dynamics have changed over the course of the last part of last year and into the first part of this year. If you just play it back into last year, we saw the rate environment continue to drive higher and the deposit environment obviously be rising rate, rising cost. And yet you also saw asset growth across the industry rapidly decelerating.
The so-called risk-weighted asset diets were in full effect in the back half of last year. That, to some degree, alleviated the deposit volume pressure that would have otherwise been there. If you fast forward now into the first half of this year, kind of the opposite of true. We've seen the deposit cost environment top out, and we are seeing now the beginning stages of down beta management in the environment broadly. We're doing that, and we're seeing it actively in a test-and-learn way, I would say, in the competitive environment. Think shortening of CD deposit tenor, think testing of lower price points in various customer segments and geographies. That's occurring.
Yet also we're seeing something else happen, which is loan growth across the industry has now stabilized and I think is poised to continue to modestly grow over the course of the remainder of this year, which is increasing the demand for deposit gathering across the sector, which is somewhat increasing competition. So the net of those two things is continuing to be a fairly robust and competitive funding environment. With that being said, we like our hand. We're growing deposits very well, fundamentally driven by primary bank operating account and household growth. And as I mentioned, setting up the ability to continue to drive accelerated loan growth out for over the next six to eight quarters.
Got it. And you spoke about two new verticals in mortgage servicing segment as well as the HOA title and escrow deposits.
I think you mentioned about a combined $10 billion benefit over, say, three years or so. Can you talk about how quickly do you think you can get there? Is that a little bit more back-end loaded as you make the investments now and grow in year two and year three, or do you think you can get out the gate with some deposit growth?
I think we're going to get out of the gate here pretty strong, and I think we're going to see substantive contribution to overall deposit growth of the company this year from these initiatives. The mortgage servicing deposit team is extraordinarily good. That's a segment that's very deposit-rich. Obviously, it requires specialized capabilities, which we have, and therefore we can support that business very well.
And then the team that's somewhat newer but in the growth mode as well in terms of escrow title, HOA, that's a likewise very attractive segment. And so I think both of them will contribute this year meaningfully and then continue on over the next medium term to achieve the goals we set.
Perfect. Maybe moving on to fees. You reiterated the guide. You spoke about Merchant Acquiring. You're bringing that in-house. Can you talk about, in terms of the rationale for bringing Merchant Acquiring in-house, is it big revenue opportunity? Is there a big cross-sell opportunity over the next two or three years? Can you talk a little bit more about that?
Sure. It's a terrific question. For those of you who are maybe perhaps less familiar with Merchant Acquiring, it's a core treasury management offering.
It's often the sort of tip of the spear to really penetrate in operating accounts in both the smaller business commercial segment and in the middle market and large corporate segment, incredibly relevant. Previously, this had lasted going back 15 years or so, we had had an outsourced merchant acquiring model. We were simply providing referral leads to our partner and benefiting from a smaller share of economics, but more importantly, didn't really fully embed that product into our treasury management offering as powerfully and as seamlessly as we can if it's in-house. Now what we're doing is moving that to a full in-house model.
We'll drive all of the sales and servicing, tie in that product much more deeply into our core banking product set, both in the overall service and product value prop, but also into the digital capabilities, which over time offer considerable opportunity to drive embedded payments and embedded lending very importantly. So it's a highly strategic product, and as we noted, we're expecting to see a nice pop in revenue here over the course of the next year and continue to drive that forward really as we penetrate additional clients. That's the main driver.
And what are you seeing on the capital market side? Are M&A advisory fees at Capstone starting to pick up?
Yeah. I expect to see M&A advisory fees grow into the second quarter, seeing a strong quarter thus far and continue to grow out into the back half of the year.
The team at Capstone have an extraordinarily strong pipeline, both in terms of level, but also more importantly, quality. The quality of the firms ultimately are engaged is quite high. The first quarter and the fourth quarter are clearly pretty choppy environments for M&A advisory, just given the kind of uncertainty and significant changes in the path of rate expectations. That seems to have stabilized now, and we are seeing the opportunity to sequentially grow here. I would also note that around t2/3 of our capital markets revenues are commercial banking related, the other third being advisory. In the commercial banking related revenues, given that we are accelerating commercial banking loan production, we're seeing a nice tailwind follow-through in terms of capital markets activities as well.
So strong confidence we'll see capital markets revenues expand throughout the course of this year and continue to what I see is long-term high single-digit, double-digit growth rate of revenues. Same is true in payments and wealth management. That will really fuel that 5%-7% fee growth this year, and I think continuing on at or above that pace as we get into 2025.
All right. Perfect. I'm going to come to the audience in just a sec to see if there's any questions in the room. Maybe on the expense side, Zach, you've guided to about 4.5% expense growth in 2024. Maybe this is an unfair question because I'm going to ask you about 2025, but I think this year has been a year of investment. As we think about 2025, without giving specific numbers, is that going to be a more normal year?
Do you still see more room for more investment?