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PNC Raises Q3 NII Outlook on Outperformance in Capital Markets
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At the 2024 Barclays Global Financial Services Conference, The PNC Financial Services Group, Inc.’s (PNC - Free Report) chairman and chief executive officer, William S. Demchak, stated that the company expects to report its third-quarter 2024 net interest income (NII) at the higher end of its previously projected 1-2% growth range.
Demchak said, “We'd be at the high end of the guide or even better simply on the outperformance of Harris Williams in capital markets relative to what we had expected.” Harris Willams is a global investment bank and maintains its corporate identity as a subsidiary of PNC Financial.
Some other major banks like Citigroup (C - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) also participated in the conference and provided updated guidance. Citigroup stated that the company’s Investment Banking fees are anticipated to jump 20% from the year-ago period in the third quarter of 2024. This will likely be driven by upbeat activity across debt capital markets and mergers and acquisitions.
GS mentioned that the firm’s trading revenues will probably slide 10% in the third quarter of 2024. The decline will follow a very strong quarter for trading in the third quarter of 2023, when equities revenues jumped 8%.
Federal Reserve’s Rate Cut to Aid PNC’s NII
The recent announcement of Federal Reserve’s chairman, Jerome Powell, on Aug. 23, at the Jackson Hole Economic Symposium gave clear signals that the Fed is set to cut interest rates beginning this month. The rate cut will likely further strengthen PNC’s NII and net interest margin in the upcoming quarters as the funding costs will stabilize.
Insight Into PNC’s Q3 Projections for Other Metrics
PNC Financial expects average loans to remain stable at $319.9 billion.
The Fee income is likely to rise 1-2% from $1.77 billion reported in the previous quarter.
Other non-interest income is projected between $150 million and $200 million compared with $332 million.
Adjusted non-interest expenses are envisioned to increase 3-4% from $3.2 billion reported in the second quarter of 2024.
PNC’s Inorganic Expansion Efforts to Drive Growth
The company remains committed to strengthening its business through strategic initiatives and acquisitions. In May, the bank extended its partnership with TCW Group to offer private credit solutions to middle-market companies. It aims to raise $2.5 billion in investor equity capital for investment in its first year. This partnership will allow the bank to gain a significant share of the expanding private credit market.
In February 2024, it announced its plans to invest approximately $1 billion to open more than 100 branches and renovate over 1,200 existing locations by 2028. Such efforts will bolster its presence in key locations as well as augment its retail banking business.
PNC’s focus on strategic initiatives, including partnerships, acquisitions and expansion, positions it well for future growth. These efforts are expected to strengthen its market presence and enhance its competitive advantage. The commitment to innovation and growth will support its long-term success.
In the past six months, the stock has risen 18.4% compared with the industry’s growth of 7.2%.
Image: Bigstock
PNC Raises Q3 NII Outlook on Outperformance in Capital Markets
At the 2024 Barclays Global Financial Services Conference, The PNC Financial Services Group, Inc.’s (PNC - Free Report) chairman and chief executive officer, William S. Demchak, stated that the company expects to report its third-quarter 2024 net interest income (NII) at the higher end of its previously projected 1-2% growth range.
Demchak said, “We'd be at the high end of the guide or even better simply on the outperformance of Harris Williams in capital markets relative to what we had expected.” Harris Willams is a global investment bank and maintains its corporate identity as a subsidiary of PNC Financial.
Some other major banks like Citigroup (C - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) also participated in the conference and provided updated guidance. Citigroup stated that the company’s Investment Banking fees are anticipated to jump 20% from the year-ago period in the third quarter of 2024. This will likely be driven by upbeat activity across debt capital markets and mergers and acquisitions.
GS mentioned that the firm’s trading revenues will probably slide 10% in the third quarter of 2024. The decline will follow a very strong quarter for trading in the third quarter of 2023, when equities revenues jumped 8%.
Federal Reserve’s Rate Cut to Aid PNC’s NII
The recent announcement of Federal Reserve’s chairman, Jerome Powell, on Aug. 23, at the Jackson Hole Economic Symposium gave clear signals that the Fed is set to cut interest rates beginning this month. The rate cut will likely further strengthen PNC’s NII and net interest margin in the upcoming quarters as the funding costs will stabilize.
Insight Into PNC’s Q3 Projections for Other Metrics
PNC Financial expects average loans to remain stable at $319.9 billion.
The Fee income is likely to rise 1-2% from $1.77 billion reported in the previous quarter.
Other non-interest income is projected between $150 million and $200 million compared with $332 million.
Adjusted non-interest expenses are envisioned to increase 3-4% from $3.2 billion reported in the second quarter of 2024.
PNC’s Inorganic Expansion Efforts to Drive Growth
The company remains committed to strengthening its business through strategic initiatives and acquisitions. In May, the bank extended its partnership with TCW Group to offer private credit solutions to middle-market companies. It aims to raise $2.5 billion in investor equity capital for investment in its first year. This partnership will allow the bank to gain a significant share of the expanding private credit market.
In February 2024, it announced its plans to invest approximately $1 billion to open more than 100 branches and renovate over 1,200 existing locations by 2028. Such efforts will bolster its presence in key locations as well as augment its retail banking business.
PNC’s focus on strategic initiatives, including partnerships, acquisitions and expansion, positions it well for future growth. These efforts are expected to strengthen its market presence and enhance its competitive advantage. The commitment to innovation and growth will support its long-term success.
In the past six months, the stock has risen 18.4% compared with the industry’s growth of 7.2%.
Image Source: Zacks Investment Research
PNC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.