PNC Financial Q3 Earnings Beat on Higher Fee Income, Costs Rise

The PNC Financial Services Group, Inc.’s PNC third-quarter 2024 adjusted earnings per share of $3.49 surpassed the Zacks Consensus Estimate of $3.29. In the prior-year quarter, the company reported earnings per share of $3.60.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

Results were aided by a rise in fee income and higher loan balance. However, a decline in net interest income (NII) and an increase in provisions for credit losses, along with a rise in expense base, were major headwinds. 

Net income (GAAP basis) was $1.5 billion, down 4.1% from the prior-year quarter.

PNC’s Quarterly Revenues and Expenses Rise

Total quarterly revenues were $5.43 billion, up 3.8% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $5.37 billion.

Quarterly NII was $3.4 billion, which declined marginally from the year-ago quarter. Net interest margin (NIM) decreased 7 basis points to 2.64%. Our estimate for NII and NIM was $3.36 billion and 2.66%, respectively.

Non-interest income increased 11.4% year over year to $2 billion. The improvement was driven by a rise in all the components of fee income except for residential and commercial mortgage income. Our estimate was $1.94 billion.

Non-interest expenses totaled $3.33 billion, which increased 2.5% from the year-ago figure. The rise was due to an increase in personnel expenses and equipment expenses. Our estimate was $3.42 billion.

The efficiency ratio was 61% compared with 62% in the year-ago quarter. A fall in the efficiency ratio reflects increased profitability.

PNC’s Loan Balance Declines, Deposits Rise

As of Sept. 30, 2024, total loans were $321.4 billion, which decreased slightly on a sequential basis. Our estimate for total loans was $320.3 billion. However, total deposits increased 1.8% from the end of the previous quarter to $424 billion. Our estimate for total deposits was $558.9 billion.

PNC’s Credit Quality Deteriorates

Non-performing loans jumped 21.4% year over year to $2.6 billion. Additionally, the company reported a provision for credit losses of $243 million in the third quarter, which surged 88.4% from the year-earlier quarter. Our estimate for Provision for Credit Losses was $219.4 million.

Further, net loan charge-offs were $286 million, which increased significantly from $121 million in the third quarter of 2023.

Nonetheless, the allowance for credit losses decreased 1.7% to $5.3 billion.

PNC’s Capital Position Improves, Profitability Ratios Weaken

As of Sept. 30, 2024, the Basel III common equity tier 1 capital ratio was 10.3% compared with 9.8% as of Sept. 30, 2023.

Return on average assets and average common shareholders’ equity were 1.05% and 11.72%, respectively, compared with 1.12% and 13.65% witnessed in the prior-year quarter.

PNC’s Capital Distribution Activity

In the third quarter of 2024, PNC Financial returned $0.8 billion of capital to shareholders. This included more than $0.6 billion in common stock dividends and more than $0.1 billion in common share repurchases.

Our View on PNC

PNC Financial’s solid balance sheet, fee income growth and strategic initiatives will aid its financials. Also, the company’s strategic acquisitions support its financials. However, an elevated expense base is likely to keep affecting PNC Financial's bottom-line growth in the near term.

The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise

Currently, PNC Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Banks

M&T Bank Corporation MTB is slated to report third-quarter 2024 results on Oct. 17. It carries a Zacks Rank #3 (Hold) at present.

Over the past month, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has moved marginally downward to $3.60.

Fifth Third Bancorp FITB is scheduled to release third-quarter 2024 earnings on Oct. 18. The company carries a Zacks Rank #3 at present.

The consensus estimate for FITB’s quarterly earnings has remained unchanged at 82 cents per share over the past month.

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