PNC Bank Earnings Beat Expectations but Lowered 2023 Revenue Guidance

PNC Financial Services Group, one of the largest regional banks in the U.S., reported better than expected first quarter earnings before the market Friday along with JPMorgan, Wells Fargo, and Citigroup.  Net income was $1.61 billion, up 18% from a year ago. Earnings of $3.98 a share beat analyst expectations. Shares were down 2% in U.S. premarket with concerns about regional banking despite the beat as PNC lowered its 2023 revenue guidance. PNC stock has fallen more than 20% from the beginning of March, before the collapse of three regional U.S. banks.

Non-interest income fell 8.2% year over year to $2.08 billion due to falling fee income components, except for card and cash management fees, and lending and deposit services fees. PNC reported provision for credit losses of $408 million in the fourth quarter and net loan charge-offs were $224 million, up 80.6% year over year.

pnc bank atm

PNC Financial Services Group Inc NYSE: PNC · Reported Before Open Wednesday

PNC Q1 2023 Earnings

Q1 2023 earnings before the bell; conference call at 10 a.m. ET Wednesday

  • Net income attributable to common shareholders of $1.61 billion, up 18% from a year ago.
  • Earnings of $3.98 a share, beating analyst $3.66 expectations and $3.23 in Q1 2022.
  • Revenue $5.6 billion in line with forecasts, rose 19.4% Y/Y
  • Bank’s average deposits increased 0.3% in the quarter, up $1.3 billion to $436.2 billion.
  • Net interest income $3.6 billion down 2.7% from Q4, but 27.8% higher Y/Y.
  • Net interest margins decreased 8 basis points to 2.84%, as higher yields on interest-earning assets were offset by funding costs.
  • Non-interest income slipped 2.9% sequentially to $2.02B, but was 6.9% higher Y/Y.
  • Provision for credit losses was $235M vs. $408M in Q4.
  • Noninterest expense fell 4.4% from Q4 to $3.32B.

“During a quarter characterized by heightened market volatility, we grew deposits, increased our capital position and drove strong financial results,” said Bill Demchak, the bank’s chairman and CEO. “Looking ahead, PNC remains well positioned to deliver for all stakeholders through the current environment and beyond.”

PNC: Stock Market Reaction

  • $119.47 ▼ -1.94 (-1.59%) Morning
  • $119.47 ▼ -55.21 (-31.55%) past year
  • $119.47 ▼ -24.25 (-16.83%) past 5 years
  • 52wk High $183.19
  • 52wk Low $117.54

Capital Position Weakened, Profitability Ratios Improve

  • As of Dec 31, 2022, the Basel III common equity tier 1 capital ratio was 9.1% compared with 10.3% as of Dec 31, 2021.
  • Return on average assets and average common shareholders’ equity were 1.10% and 14.19%, respectively, compared with 0.93% and 9.61% witnessed in the prior-year quarter.

Share Repurchases and Dividends

In the fourth quarter of 2022, PNC Financial returned $1.2 billion of capital to shareholders through dividends on common shares of $0.6 billion and share repurchases amounting to $0.6 billion.


PNC lowered its 2023 revenue guidance expecting 2023 revenue of $21.96B-$22.18B, up 4%-5% Y/Y, lower than consensus estimate of $22.60B. Its earlier forecast was for revenue to grow 6%-8% Y/Y.

What Analysts Are Saying:

After Earnings Release:

Bill Carcache, analyst, Wolfe Research.

“Higher fee income, lower provision, and modestly better expenses drive Q1 beat,” “PNC provided Q2 and revised 2023 guidance, both implying ~5% downside to consensus PPNR.”

Forecasts Q2 revenue of ~$5.43B, lower than $5.65B consensus. NII is projected to be $3.44B-$3.51B, down 2%-4% sequentially. Fee income is expected to be $1.74B-$1.76B.

Evercore ISI

“NII was essentially in line as higher deposits and investment securities offset slightly weaker loan growth than modeled,” “2023 outlook modest net negative on lower top line expectation.”

Before Earnings Release:

Piper Sandler

Signs of asset quality deterioration are a risk for PNC Financial Services Group (PNC US), Piper Sandler analysts warn. Consensus sees the bank setting aside an additional $308 million in loan-loss provisions in the first quarter, compared to the $208 million released in the same period a year ago.

Yet PNC is expected to hold up well to heightened scrutiny over bank deposits; according to data compiled by Bloomberg, the rate of funds leaving PNC’s balance sheet quarter-on-quarter is expected to slow to less than a percentage point, compared to about 1.5% a year ago. PNC’s ability to rein in expenses will also be assessed in its pre-open earnings report, with consensus seeing non-interest costs rise by about 6% from a year ago, the first increase in three quarters.


“1Q earnings will likely be pressured, in our view, as we see banks shift towards a more defensive and conservative stance, and we anticipate a slew of downward revisions to guidance,” Wedbush analysts said in a March 29 research note. “We expect loan growth to slow from the strong pace over the prior few quarters as demand cools in light of higher rates and the uncertain economic environment.”

Higher Interest Rates Increase Revenue …. But at a Cost

Understandably there is a crisis of confidence in regional banks sparked off by last month’s collapse of Silicon Valley Bank. We warned last quarter higher interest rates from the Federal Reserve’s aggressive rate hiking revenues are expected to rise from a year earlier. To that we warned of the downside, what we didn’t know is how poorly the regional banks were managed. Silicon Valley and Signature Banks will be taught in economic classes along with Enron, South Sea Bubble and Worldcom in business and economic classes.

“US bank lending contracted by the most on record in the last two weeks of March, indicating a substantial tightening of credit conditions in the wake of several high-profile bank collapses… Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973. The more than $45 billion decrease in the latest week was primarily due to a drop in loans by small banks… Friday’s report also showed commercial bank deposits dropped $64.7 billion in the latest week, marking the 10th-straight decrease that mainly reflected a decline at large firms… The Fed’s report showed that by bank size, lending decreased $23.5 billion at the 25 largest domestically chartered banks in the latest two weeks, and plunged $73.6 billion at smaller commercial banks over the same period.”April 7 – Bloomberg (Alexandre Tanzi)

The brighter outlook for bank profits coincides with higher Treasury yields. The benchmark 10-year Treasury yield has risen dramatically for the year-to-date, with higher interest rates boosting banks income from their core lending businesses.  The bank’s net interest margin, a measure of what it collects on loans minus what it pays for deposits rises with rates.

Major tightening of real estate lending unfolding

Tighter bank lending will be compounded by a pullback in “private Credit” and other non-bank lenders. This is particularly problematic for earnings and loan quality for small and mid-sized banks that have operated so aggressively in real estate finance over recent years.

With concerns rising over the banking sector’s exposure to commercial real estate, asset quality at Pittsburgh-based PNC Financial Services Group is being scrutinized in earnings. Signs of asset quality deterioration are a risk for PNC Financial Services Group (PNC US), Piper Sandler analysts warn.

Office buildings are an obvious trouble spot, but commercial real estate in general is vulnerable. Cracks are appearing in the booming nationwide apartment marketplace, and there are indications of waning institutional interest in residential housing.

About PNC

The PNC Financial Services Group, Inc. is considered a “super regional” bank, operates across 27 states and the District of Columbia. It is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit

Source: PNC Earnings Release 

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