Earnings Reports

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PNC Financial $PNC reported better than expected first quarter earnings before the bell on Friday along with Wells Fargo $WFC, Citigroup $C and JPMorgan $JPM.  Beats on improving interest rate margins.

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Earnings

Earnings per share of $2.43 beating the Consensus Estimate of $2.4, a 24% increase from the prior-year quarter. Net income for the quarter was $1.24 billion, up 15.4% from the prior-year quarter. Total revenues for the quarter came in at $4.11 billion, rising 6% year over year. However, the reported figure lagged the Zacks Consensus Estimate of $4.15 billion.

PNC Financial Services Group Inc NYSE: $PNC

Reaction: April 13 Open $147.19 ▼ 4.50 (2.97%)

Highlights

Continued easing of pressure on net interest margin helped the company earn higher net interest income

  • Net interest income was up 9% year over year to $2.36 billion.
  • Net interest margin increased 14 basis points to 2.91%.
  • Non-interest income was up 2% year over year to $1.75 billion, driven by higher asset management income, consumer services income, service charges on deposits and other income, partially offset by lower income from residential mortgage.
  • Higher expenses cut into results
  • Results were partially offset by higher provisions.
  • PNC Financial’s non-interest expenses were $2.53 billion, increasing 5% from the year-ago quarter. The rise was primarily due to higher personnel costs.

Segments

  • Corporate and Institutional Banking on a year-over-year basis, quarterly net income improved 20.1%
  • Asset Management on a year-over-year basis, quarterly net income improved 44.7%
  • Retail Banking on a year-over-year basis, quarterly net income improved 3.6%.
  • BlackRock segment’s net income declined 11.8% from the prior-year quarter.

Loans and Capital Position

As of Mar 31, 2018, total loans rose 1% sequentially to $221.6 billion. However, total deposits declined slightly to $264.7 billion.

  • Allowance for loan and lease losses increased 2% year over year to $2.60 billion provision for credit losses was $92 million, up 5% from $88 million in the prior-year quarter.
  • Non-performing assets declined 9% to $2 billion.
  • Net charge-offs came down 4% year over year to $113 million.

Capital Position Weakened As of Mar 31, 2018, the Basel III common equity Tier 1 capital ratio, which became effective Jan 1, 2018, was 9.6% compared with 9.8% at Dec 31, 2017.

Buybacks

  • In the first quarter, PNC Financial repurchased 4.8 million common shares for $0.7 billion.
  • Dividends of $0.4 billion were distributed.

$PNC returned $.09 billion of capital to shareholders in the fourth quarter through repurchases of 3.7 million common shares for $.5 billion and dividends on common shares of $.4 billion

Outlook

AThe banking sector received a boost earlier in the year after the largest U.S. banks passed Fed stress tests and were allowed to raise dividends and share buybacks. The Fed as it raise rates is helping banks' finances. Since Donald Trump won on Election Day has been a huge run higher on PNC and the other bank stocks. Auto and student loans also overhang the banking and finance sectors. 

The bank rally had been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

Source: PNC Earnings Release 

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