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Why Is PNC Financial Services (PNC) Down 1.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for PNC Financial Services (PNC - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PNC Financial Services due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PNC Financial Q4 Earnings Lag Estimates, Revenues Up
PNC Financial reported fourth-quarter 2018 earnings per share of $2.75, which lagged the Zacks Consensus Estimate of $2.77. However, the bottom line reflected a 20.1% jump from the prior-year quarter, on an adjusted basis.
Decline in non-interest income and higher provisions posed as key headwinds. However, decline in costs supported results to some extent. Also, continued easing of pressure on net interest margin led to higher net interest income during the reported quarter.
The company’s net income for the quarter came in at $1.4 billion compared with $2.1 billion in the prior-year quarter.
For 2018, net income was approximately $5.4 billion or $10.71 per share compared with $5.4 billion or $10.36 reported in 2017.
Segment wise, on a year-over-year basis, quarterly net income at Corporate & Institutional Banking and Asset Management Group declined 32.2% and 27.6%, respectively. Also, net income for Other, including the BlackRock segment, decreased 70.7%. However, Retail Banking segment reported income of $313 million against loss of $105 million in year-ago quarter.
High Net Interest Income & Low Costs Offset by Fall in Fee Income
For full-year 2018, the company reported revenues of $17.13 billion, up 4.9% on a year-over-year basis. The figure slightly lagged the Zacks Consensus Estimate of $17.17 billion.
Total revenues for the quarter came in at $4.34 billion, climbing 1.9% year over year. However, the top line missed the Zacks Consensus Estimate of $4.38 billion.
Net interest income jumped 6% from the year-ago quarter to $2.48 billion. Elevated loan, and securities yields and balances were partly mitigated by growth in deposit and borrowing costs. Additionally, net interest margin expanded 8 basis points to 2.96%.
Non-interest income was down 3% year over year to $1.86 billion due to lower income from asset management, partially offset by higher consumer services income, residential mortgage, corporate services and service charges on deposits.
PNC Financial’s non-interest expenses totaled $2.6 billion, down 16% from the year-ago figure. The decline primarily stemmed from lower personnel, occupancy and other costs.
As of Dec 31, 2018, total loans inched up nearly 3% year over year to $226.2 billion. Also, total deposits improved 1% to $267.9 billion.
Credit Quality: A Mixed Bag
Non-performing assets declined 11% to $1.81 billion, year over year. Further, net charge-offs fell 13% to $107 million.
However, provision for credit losses was $148 million, up 18% from $125 million reported in the prior-year quarter. Also, allowance for loan and lease losses increased 1% to $2.6 billion.
Capital Position Weakens
As of Dec 31, 2018, the Basel III common equity Tier 1 capital ratio, effective Jan 1, 2018, was 9.6% compared with 9.8% as of Dec 31, 2017.
Share Repurchase
In the fourth quarter, PNC Financial repurchased 6.1 million common shares for $0.8 billion. Also, dividends of $0.4 billion were distributed.
Outlook
First-Quarter 2019
The company expects average loans to remain stable on a sequential basis.
Management expects NII to be flat. Fee income is expected to decline in low-single digits sequentially. Other non-interest income is anticipated to be in the range of $275-$325 million.
Non-interest expenses are expected to remain stable on a sequential basis.
Provisions for loan loss are estimated to be in the range of $125-$175 million.
Full-Year 2019 Compared With Full-Year 2018
The company assumes steady growth in GDP along with increasing short-term interest rates. In 2019, it expects one rate hike of 25 bps in September.
Loans are anticipated to grow 3-4%.
Management anticipates revenues to increase in low-single digits.
Further, non-interest expenses are predicted to rise at low-single digit rates.
The effective tax rate is projected to be approximately 17%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, PNC Financial Services has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
PNC Financial Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is PNC Financial Services (PNC) Down 1.1% Since Last Earnings Report?
A month has gone by since the last earnings report for PNC Financial Services (PNC - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PNC Financial Services due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PNC Financial Q4 Earnings Lag Estimates, Revenues Up
PNC Financial reported fourth-quarter 2018 earnings per share of $2.75, which lagged the Zacks Consensus Estimate of $2.77. However, the bottom line reflected a 20.1% jump from the prior-year quarter, on an adjusted basis.
Decline in non-interest income and higher provisions posed as key headwinds. However, decline in costs supported results to some extent. Also, continued easing of pressure on net interest margin led to higher net interest income during the reported quarter.
The company’s net income for the quarter came in at $1.4 billion compared with $2.1 billion in the prior-year quarter.
For 2018, net income was approximately $5.4 billion or $10.71 per share compared with $5.4 billion or $10.36 reported in 2017.
Segment wise, on a year-over-year basis, quarterly net income at Corporate & Institutional Banking and Asset Management Group declined 32.2% and 27.6%, respectively. Also, net income for Other, including the BlackRock segment, decreased 70.7%. However, Retail Banking segment reported income of $313 million against loss of $105 million in year-ago quarter.
High Net Interest Income & Low Costs Offset by Fall in Fee Income
For full-year 2018, the company reported revenues of $17.13 billion, up 4.9% on a year-over-year basis. The figure slightly lagged the Zacks Consensus Estimate of $17.17 billion.
Total revenues for the quarter came in at $4.34 billion, climbing 1.9% year over year. However, the top line missed the Zacks Consensus Estimate of $4.38 billion.
Net interest income jumped 6% from the year-ago quarter to $2.48 billion. Elevated loan, and securities yields and balances were partly mitigated by growth in deposit and borrowing costs. Additionally, net interest margin expanded 8 basis points to 2.96%.
Non-interest income was down 3% year over year to $1.86 billion due to lower income from asset management, partially offset by higher consumer services income, residential mortgage, corporate services and service charges on deposits.
PNC Financial’s non-interest expenses totaled $2.6 billion, down 16% from the year-ago figure. The decline primarily stemmed from lower personnel, occupancy and other costs.
As of Dec 31, 2018, total loans inched up nearly 3% year over year to $226.2 billion. Also, total deposits improved 1% to $267.9 billion.
Credit Quality: A Mixed Bag
Non-performing assets declined 11% to $1.81 billion, year over year. Further, net charge-offs fell 13% to $107 million.
However, provision for credit losses was $148 million, up 18% from $125 million reported in the prior-year quarter. Also, allowance for loan and lease losses increased 1% to $2.6 billion.
Capital Position Weakens
As of Dec 31, 2018, the Basel III common equity Tier 1 capital ratio, effective Jan 1, 2018, was 9.6% compared with 9.8% as of Dec 31, 2017.
Share Repurchase
In the fourth quarter, PNC Financial repurchased 6.1 million common shares for $0.8 billion. Also, dividends of $0.4 billion were distributed.
Outlook
First-Quarter 2019
The company expects average loans to remain stable on a sequential basis.
Management expects NII to be flat. Fee income is expected to decline in low-single digits sequentially. Other non-interest income is anticipated to be in the range of $275-$325 million.
Non-interest expenses are expected to remain stable on a sequential basis.
Provisions for loan loss are estimated to be in the range of $125-$175 million.
Full-Year 2019 Compared With Full-Year 2018
The company assumes steady growth in GDP along with increasing short-term interest rates. In 2019, it expects one rate hike of 25 bps in September.
Loans are anticipated to grow 3-4%.
Management anticipates revenues to increase in low-single digits.
Further, non-interest expenses are predicted to rise at low-single digit rates.
The effective tax rate is projected to be approximately 17%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, PNC Financial Services has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
PNC Financial Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.