We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Loans, Fee Income to Aid PNC Financial (PNC) Q2 Earnings
Read MoreHide Full Article
PNC Financial Services Group, Inc. (PNC - Free Report) is scheduled to report second-quarter 2022 earnings before the opening bell on Jul 15. While the company’s earnings are expected to have witnessed year-over-year decline, its revenues are likely to have increased.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate on fee income and net interest income (NII) growth. However, higher expenses and a decline in deposits dragged results.
Notably, PNC Financial has an impressive earnings surprise history. It surpassed estimates in all trailing four quarters, delivering an earnings surprise of 16.4%, on average.
The PNC Financial Services Group, Inc Price and EPS Surprise
The company’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of $3.13 has moved marginally downward in the past month, reflecting bearish sentiments of analysts. Further, the figure indicates a 30.4% decline from the year-ago reported number. Nonetheless, the consensus estimate for revenues is pegged at $5.12 billion, suggesting year-over-year growth of 9.7%. Management expects the top line to be up 9-11% sequentially.
Now, let’s discuss factors that are likely to have impacted the company’s second-quarter performance:
NII: The ongoing economic expansion is expected to have supported the lending environment in the quarter. Amid this, the demand for loans is anticipated to have improved. Per the Fed’s latest data, commercial real estate loans, consumer loans, credit card loans and commercial and industrial loans have driven overall loan demand in April and May. Hence, the company’s loan balances are likely to have improved in the second quarter. The company expects average loans to rise 2-3% sequentially.
The Zacks Consensus Estimate for average interest-earning assets of $508.7 billion for the quarter indicates a 2.4% rise sequentially. This is expected to have aided NII growth during the quarter.
The positive impact of the rate hikes [25 basis points (bps) in March, 50 bps in May and 75 bps in June] is likely to have been reflected in the company NII and margins in the second quarter.
Management anticipates NII to grow 10-12% sequentially. Also, the consensus estimate for NII is pegged at $3.06 billion, suggesting a 9.3% decline from the first quarter.
Non-Interest Revenues: While 2022 started on a positive note, the geopolitical tensions related to the Russian-Ukraine war dampened the equity market performance. Thus, asset management revenues are anticipated to have been negatively impacted. The consensus estimate of $330 million for asset management revenues indicates a 12.5% fall sequentially.
Brokerage fees, comprising part of the company’s consumer services revenues, might also have been negatively impacted by the decline in equity markets. This might have been partially offset by an improvement in the consumer spending scenario due to higher employee compensation, which is expected to have favorably impacted card fees in the quarter.
Due to weak markets and global economic uncertainty, deal-making activity and IPOs reduced in second-quarter 2022. Given these capital market disruptions, the company’s capital markets-related revenues are likely to have been negatively impacted.
Deposits slowed down in the quarter, likely due to a decrease in government aid and consumer savings. This, along with low service charges, might have resulted in lower revenues from service charges on deposits.
Mortgage rates increased sequentially in the to-be-reported quarter. Also, mortgage origination activities are estimated to have decreased drastically, with the rising rates dismaying refinancing activity. Thus, these factors are expected to have hurt PNC Financial’s residential mortgage revenues in the to-be-reported quarter. The Zacks Consensus Estimate for the same of $119 million indicates a decline of 25.2% from the prior quarter’s reported number.
Overall, the Zacks Consensus Estimate for non-interest income is pegged at $2 billion, suggesting a 6.4% increase sequentially. Management expects fee income to increase 6-8% sequentially.
Expenses: The company’s costs are likely to have increased on integration expenses related to the BBVA USA acquisition. Overall, technology investments and general inflationary pressures might have inflated costs, while wage inflation is anticipated to have escalated personnel expenses. Hence, such a rise in cost base from such expenses is likely to have impeded bottom-line growth. Management expects non-interest expenses to be sequentially up 3-5%.
What the Zacks Model Reveals
Our proven model does not predict an earnings beat for PNC Financial this time around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for PNC Financial is -2.00%.
JPMorgan Chase & Co. (JPM - Free Report) and Truist Financial (TFC - Free Report) are a few stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for JPMorgan is +3.88% and the company carries a Zacks Rank #2 (Buy) at present. JPM is slated to report second-quarter 2022 results on Jul 14.
The Zacks Consensus Estimate for JPM’s second-quarter earnings has moved marginally north over the past week.
Truist Financial is scheduled to release second-quarter results on Jul 19. TFC currently has a Zacks Rank #3 and an Earnings ESP of +1.80%.
The Zacks Consensus Estimate for TFC’s second-quarter earnings has moved south over the past month.
Image: Bigstock
Loans, Fee Income to Aid PNC Financial (PNC) Q2 Earnings
PNC Financial Services Group, Inc. (PNC - Free Report) is scheduled to report second-quarter 2022 earnings before the opening bell on Jul 15. While the company’s earnings are expected to have witnessed year-over-year decline, its revenues are likely to have increased.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate on fee income and net interest income (NII) growth. However, higher expenses and a decline in deposits dragged results.
Notably, PNC Financial has an impressive earnings surprise history. It surpassed estimates in all trailing four quarters, delivering an earnings surprise of 16.4%, on average.
The PNC Financial Services Group, Inc Price and EPS Surprise
The PNC Financial Services Group, Inc price-eps-surprise | The PNC Financial Services Group, Inc Quote
The company’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of $3.13 has moved marginally downward in the past month, reflecting bearish sentiments of analysts. Further, the figure indicates a 30.4% decline from the year-ago reported number. Nonetheless, the consensus estimate for revenues is pegged at $5.12 billion, suggesting year-over-year growth of 9.7%. Management expects the top line to be up 9-11% sequentially.
Now, let’s discuss factors that are likely to have impacted the company’s second-quarter performance:
NII: The ongoing economic expansion is expected to have supported the lending environment in the quarter. Amid this, the demand for loans is anticipated to have improved. Per the Fed’s latest data, commercial real estate loans, consumer loans, credit card loans and commercial and industrial loans have driven overall loan demand in April and May. Hence, the company’s loan balances are likely to have improved in the second quarter. The company expects average loans to rise 2-3% sequentially.
The Zacks Consensus Estimate for average interest-earning assets of $508.7 billion for the quarter indicates a 2.4% rise sequentially. This is expected to have aided NII growth during the quarter.
The positive impact of the rate hikes [25 basis points (bps) in March, 50 bps in May and 75 bps in June] is likely to have been reflected in the company NII and margins in the second quarter.
Management anticipates NII to grow 10-12% sequentially. Also, the consensus estimate for NII is pegged at $3.06 billion, suggesting a 9.3% decline from the first quarter.
Non-Interest Revenues: While 2022 started on a positive note, the geopolitical tensions related to the Russian-Ukraine war dampened the equity market performance. Thus, asset management revenues are anticipated to have been negatively impacted. The consensus estimate of $330 million for asset management revenues indicates a 12.5% fall sequentially.
Brokerage fees, comprising part of the company’s consumer services revenues, might also have been negatively impacted by the decline in equity markets. This might have been partially offset by an improvement in the consumer spending scenario due to higher employee compensation, which is expected to have favorably impacted card fees in the quarter.
Due to weak markets and global economic uncertainty, deal-making activity and IPOs reduced in second-quarter 2022. Given these capital market disruptions, the company’s capital markets-related revenues are likely to have been negatively impacted.
Deposits slowed down in the quarter, likely due to a decrease in government aid and consumer savings. This, along with low service charges, might have resulted in lower revenues from service charges on deposits.
Mortgage rates increased sequentially in the to-be-reported quarter. Also, mortgage origination activities are estimated to have decreased drastically, with the rising rates dismaying refinancing activity. Thus, these factors are expected to have hurt PNC Financial’s residential mortgage revenues in the to-be-reported quarter. The Zacks Consensus Estimate for the same of $119 million indicates a decline of 25.2% from the prior quarter’s reported number.
Overall, the Zacks Consensus Estimate for non-interest income is pegged at $2 billion, suggesting a 6.4% increase sequentially. Management expects fee income to increase 6-8% sequentially.
Expenses: The company’s costs are likely to have increased on integration expenses related to the BBVA USA acquisition. Overall, technology investments and general inflationary pressures might have inflated costs, while wage inflation is anticipated to have escalated personnel expenses. Hence, such a rise in cost base from such expenses is likely to have impeded bottom-line growth. Management expects non-interest expenses to be sequentially up 3-5%.
What the Zacks Model Reveals
Our proven model does not predict an earnings beat for PNC Financial this time around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for PNC Financial is -2.00%.
Zacks Rank: The company currently carries a Zacks Rank of 3.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
JPMorgan Chase & Co. (JPM - Free Report) and Truist Financial (TFC - Free Report) are a few stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for JPMorgan is +3.88% and the company carries a Zacks Rank #2 (Buy) at present. JPM is slated to report second-quarter 2022 results on Jul 14.
The Zacks Consensus Estimate for JPM’s second-quarter earnings has moved marginally north over the past week.
Truist Financial is scheduled to release second-quarter results on Jul 19. TFC currently has a Zacks Rank #3 and an Earnings ESP of +1.80%.
The Zacks Consensus Estimate for TFC’s second-quarter earnings has moved south over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.