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PNC Financial (PNC) Q2 Earnings Beat on Higher Fee Income
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The PNC Financial Services Group, Inc.’s (PNC - Free Report) second-quarter 2024 earnings per share of $3.39 surpassed the Zacks Consensus Estimate of $3. In the prior-year quarter, the company reported earnings per share of $3.36.
PNC shares have gained 1.2% in the pre-market trading on better-than-expected results.
Results were aided by a rise in fee income and higher loan balance, along with reduced expenses. However, a decline in net interest income (NII) and an increase in provisions for credit losses acted as spoilsport.
Net income was $1.48 billion, down 1.5% from the prior-year quarter.
Quarterly Revenues Increase and Expenses Fall
Total quarterly revenues were $5.41 billion, up 2.2% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $5.3 billion.
Quarterly NII was $3.3 billion, which declined 5.9% from the year-ago quarter. Net interest margin (NIM) decreased 19 basis points to 2.60%. Our estimate for NII and NIM was $3.27 billion and 2.58%, respectively.
Non-interest income increased 18.3% year over year to $2.1 billion. The improvement was driven by a rise in all the components of fee income. Our estimate was $1.88 billion.
Non-interest expenses totaled $3.36 billion, decreasing marginally from the year-ago figure. The decrease was a result of the company’s focus on expense management. Our estimate was $3.34 billion.
The efficiency ratio was 62% compared with 64% in the year-ago quarter. A fall in the efficiency ratio reflects increased profitability.
As of Jun 30, 2024, total loans were $321.4 billion, which increased slightly on a sequential basis. Our estimate for total loans was $321.8 billion. However, total deposits decreased 2.2% from the end of the previous quarter to $416.4 billion. Our estimate for total deposits was $409.6 billion.
Credit Quality Deteriorate
Non-performing loans jumped 30.8% year over year to $2.5 billion.
Additionally, the company reported a provision for credit losses of $235 million in the second quarter, which surged 61% from the year-earlier quarter. Our estimate for Provision for Credit Losses was $203 million.
Further, net loan charge-offs were $262 million, up 35.1% year over year.
Nonetheless, the allowance for credit losses decreased nearly 1% to $5.35 billion.
Capital Position Improves & Profitability Ratios Weaken
As of Jun 30, 2024, the Basel III common equity tier 1 capital ratio was 10.2% compared with 9.5% as of Jun 30, 2023.
Return on average assets and average common shareholders’ equity were 1.05% and 12.16%, respectively, compared with 1.08% and 13.01% witnessed in the prior-year quarter.
Capital Distribution Activity
In the second quarter of 2024, PNC Financial returned $0.7 billion of capital to shareholders. This included $0.6 billion in common stock dividends and $0.1 billion in common share repurchases.
Further, following the clearance of the 2024 stress test, on Jul 2, PNC’s board of directors approved a 3.2% increase in common stock dividend to $1.60 per share.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, the company’s strategic acquisitions support its financials. However, the increased provisions due to the expectations of an economic slowdown remain a concern.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Wells Fargo & Company's (WFC - Free Report) second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income, as well as loan and deposit balances, and an increase in expenses were the undermining factors.
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line reflects a rise of 9.4% from the prior-year quarter.
BK’s results have been primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt the results to some extent.
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PNC Financial (PNC) Q2 Earnings Beat on Higher Fee Income
The PNC Financial Services Group, Inc.’s (PNC - Free Report) second-quarter 2024 earnings per share of $3.39 surpassed the Zacks Consensus Estimate of $3. In the prior-year quarter, the company reported earnings per share of $3.36.
PNC shares have gained 1.2% in the pre-market trading on better-than-expected results.
Results were aided by a rise in fee income and higher loan balance, along with reduced expenses. However, a decline in net interest income (NII) and an increase in provisions for credit losses acted as spoilsport.
Net income was $1.48 billion, down 1.5% from the prior-year quarter.
Quarterly Revenues Increase and Expenses Fall
Total quarterly revenues were $5.41 billion, up 2.2% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $5.3 billion.
Quarterly NII was $3.3 billion, which declined 5.9% from the year-ago quarter. Net interest margin (NIM) decreased 19 basis points to 2.60%. Our estimate for NII and NIM was $3.27 billion and 2.58%, respectively.
Non-interest income increased 18.3% year over year to $2.1 billion. The improvement was driven by a rise in all the components of fee income. Our estimate was $1.88 billion.
Non-interest expenses totaled $3.36 billion, decreasing marginally from the year-ago figure. The decrease was a result of the company’s focus on expense management. Our estimate was $3.34 billion.
The efficiency ratio was 62% compared with 64% in the year-ago quarter. A fall in the efficiency ratio reflects increased profitability.
As of Jun 30, 2024, total loans were $321.4 billion, which increased slightly on a sequential basis. Our estimate for total loans was $321.8 billion. However, total deposits decreased 2.2% from the end of the previous quarter to $416.4 billion. Our estimate for total deposits was $409.6 billion.
Credit Quality Deteriorate
Non-performing loans jumped 30.8% year over year to $2.5 billion.
Additionally, the company reported a provision for credit losses of $235 million in the second quarter, which surged 61% from the year-earlier quarter. Our estimate for Provision for Credit Losses was $203 million.
Further, net loan charge-offs were $262 million, up 35.1% year over year.
Nonetheless, the allowance for credit losses decreased nearly 1% to $5.35 billion.
Capital Position Improves & Profitability Ratios Weaken
As of Jun 30, 2024, the Basel III common equity tier 1 capital ratio was 10.2% compared with 9.5% as of Jun 30, 2023.
Return on average assets and average common shareholders’ equity were 1.05% and 12.16%, respectively, compared with 1.08% and 13.01% witnessed in the prior-year quarter.
Capital Distribution Activity
In the second quarter of 2024, PNC Financial returned $0.7 billion of capital to shareholders. This included $0.6 billion in common stock dividends and $0.1 billion in common share repurchases.
Further, following the clearance of the 2024 stress test, on Jul 2, PNC’s board of directors approved a 3.2% increase in common stock dividend to $1.60 per share.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, the company’s strategic acquisitions support its financials. However, the increased provisions due to the expectations of an economic slowdown remain a concern.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
The PNC Financial Services Group, Inc price-consensus-eps-surprise-chart | The PNC Financial Services Group, Inc Quote
Currently, PNC Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Wells Fargo & Company's (WFC - Free Report) second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income, as well as loan and deposit balances, and an increase in expenses were the undermining factors.
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line reflects a rise of 9.4% from the prior-year quarter.
BK’s results have been primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt the results to some extent.