PNC Beats Expectations With a 24% Rise in Profit -- WSJ

Date : 07/14/2018 @ 3:02AM
Source : Dow Jones News
Stock : Pnc Financial Services Grp. (The) (PNC)
Quote : 136.39  -0.3 (-0.22%) @ 4:00PM

PNC Beats Expectations With a 24% Rise in Profit -- WSJ

PNC (NYSE:PNC)
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By Christina Rexrode 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 14, 2018).

PNC Financial Services Group Inc. posted better-than-expected second-quarter earnings Friday, boosted by an increase in lending and a lower tax rate.

Profit at the Pittsburgh-based bank rose 24% to $1.35 billion, from $1.09 billion a year ago.

Per-share earnings were $2.72. That beat the $2.58 per share expected by analysts polled by Thomson Reuters.

The stock rose 33 cents to $138.32 Friday, bucking the downward trend of most other banks. PNC is the first major regional bank to report second-quarter earnings.

, bucking the downward trend of most other banks. PNC is the first major regional bank to report second-quarter earnings.

In an interview, CEO Bill Demchak expressed optimism about the economy and said that talk of a trade war and tariffs so far hadn't impacted his bank's customers.

"We have clients who are winners and clients who are losers depending on tariffs that we impose and tariffs that are imposed in response to ours, " Mr. Demchak said. "But we haven't seen any slowdown at all in pipeline or activity or interest levels."

Commercial lending grew 3% from a year ago. That business is a key revenue driver for midsized banks like PNC, and analysts will try to discern if PNC's results there set the tone for other banks. Growth in that category has been disappointing throughout much of the industry, despite a recent pickup. PNC, which has long focused on the business, has been expanding it to new cities and has fared relatively well.

Consumer lending grew 1% from a year ago.

PNC also benefited from higher interest rates, which allow it to charge more on loans. Net interest income grew 7% from a year ago. The bank's net interest margin, a key measure of lending profitability, also grew. The Federal Reserve has raised short-term rates seven times since late 2015.

Total deposits were up 2%. Some regional banks have struggled to grow customer deposits against competition from bigger, more tech-savvy banks. The bank decreased the amount it set aside for possible credit losses.

Like other banks, PNC benefited from the tax law that last year slashed the corporate tax rate to 21% from 35%. PNC said its effective tax rate in the second quarter was 18%, compared to 26% a year ago.

Write to Christina Rexrode at christina.rexrode@wsj.com

 

(END) Dow Jones Newswires

July 14, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.

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