Profits Jump at U.S. Bancorp, PNC -- WSJ

Date : 07/18/2019 @ 7:02AM
Source : Dow Jones News
Stock : PNC Financial Services Group Inc (PNC)
Quote : 152.19  0.84 (0.56%) @ 3:19PM

Profits Jump at U.S. Bancorp, PNC -- WSJ

PNC Financial Services (NYSE:PNC)
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By Allison Prang and Kimberly Chin 

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 18, 2019).

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. He added that there are a lot of signs signaling that loans will continue to grow.

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

 

(END) Dow Jones Newswires

July 18, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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