Strong Borrowing Fuels Earnings Boost at U.S. Bancorp, PNC
July 17 2019 - 3:46PM
Dow Jones News
By Allison Prang and Kimberly Chin
Two of the largest regional lenders in the U.S. reported that
strong borrowing spurred higher revenue and profits in the latest
quarter.
U.S. Bancorp logged a profit of $1.82 billion, up 4.1% from a
year earlier. Earnings were $1.09 a share. PNC Financial Services
Group Inc. reported a quarterly profit of $1.36 billion, a 1.2%
rise from a year earlier. Per-share earnings were $2.88.
At U.S. Bancorp, net interest income, or the difference between
what a bank makes from loans or investments and the interest paid
to depositors, climbed 3.4%. The Minneapolis-based company
attributed the rise partly to loan growth. Average total loans rose
3.8% in the second quarter thanks to an increase in commercial,
residential mortgage and credit-card lending.
Overall, net revenue grew 3.2%.
"I think consumer spending continues to be strong, GDP is
holding up OK, unemployment is just fine," Terry Dolan, U.S.
Bancorp's chief financial officer, said on the company's earnings
call. "There is a lot of signs that would suggest that loan growth
is going to continue."
Pittsburgh-based PNC's net interest income rose 3.5%, as total
revenue jumped 2.7%. Average total loans grew 5.5%, with average
total commercial loans rising 6.9%.
While the banks are adding loans, there is some pressure on
their net interest margins, an important metric for banks that
measures the difference between how much they earn on interest on
loans and how much they pay on deposits.
U.S. Bancorp's net interest margin was 3.13%, unchanged from the
comparable quarter a year earlier and down three basis points from
the first quarter of this year. Mr. Dolan said the company expects
that metric to fall in the high single digits in the third
quarter.
PNC's net interest margin was 2.91%, lower than the 2.96%
reported in the comparable quarter a year ago and seven basis
points lower than in the first quarter.
Executives at both PNC and U.S. Bancorp said they expect the
Federal Reserve to cut rates twice this year. Any cuts by the
central bank would put pressure on bank earnings. Higher rates let
banks charge more in interest, which helps them bring in more
money.
Write to Allison Prang at allison.prang@wsj.com and Kimberly
Chin at kimberly.chin@wsj.com
Write to Allison Prang at allison.prang@wsj.com and Kimberly
Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
July 17, 2019 15:31 ET (19:31 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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