PNC Results Lifted by Loan Growth
April 12 2019 - 12:43PM
Dow Jones News
By Allison Prang
Strong loan growth helped fuel a rise in revenue and profits for
PNC Financial Services Group Inc. in the first quarter.
Revenue for PNC, one of the country's largest regional banking
companies, rose 4.3% from a year earlier to $4.29 billion. Analysts
polled by Refinitiv were expecting $4.27 billion in revenue.
Net interest income rose 4.8% to $2.48 billion. Noninterest
income increased 3.5% to $1.81 billion.
PNC reported earnings rose 2.6% to $1.26 billion, or $2.61 a
share, which was in line with the consensus from analysts.
PNC's provision for credit losses more than doubled to $189
million, which Chief Executive Bill Demchak attributed to strong
loan growth, in prepared remarks Friday. Executives also said the
bank's credit quality was strong.
The bank guided its loan-loss provision to be between $125
million and $200 million in the second quarter.
Total loans at PNC rose 4.8%, mainly because of an increase in
commercial loans. Consumer lending grew at a slower pace.
Mr. Demchak told analysts during a conference call that clients
paid down their loans at a slower pace during the quarter and used
more of their lending lines. He said PNC also grew its client
base.
The company's net interest margin -- an important measure for
banks that highlights their lending profitability -- was 2.98%, up
from 2.91% in the comparable quarter a year ago. Net interest
margin in the fourth quarter was 2.96%.
Mr. Demchak told analysts that PNC's net interest margin should
drop one or two basis points through this year. He said PNC's
deposit betas -- the interest PNC pays out to depositors -- was a
big variable along with funding costs. Paying out more interest to
depositors also impacts banks' net interest margins.
Separately on the call, Mr. Demchak shot down the idea of taking
over the CEO job at Wells Fargo & Co. whose former CEO, Tim
Sloan, retired just last month.
"I like my job here. I like our company," he said, in response
to an analyst's inquiry. "I will end my career here." Mr. Demchak
has been with PNC since 2002 and was named CEO in 2013.
Shares in PNC rose 2% to $131.25 in Friday trading. PNC's stock
has gained about 12% this year.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
April 12, 2019 12:28 ET (16:28 GMT)
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