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PNC Financial (PNC) Q1 Earnings Beat, Revenues Miss Estimates
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The PNC Financial Services Group, Inc. (PNC - Free Report) has pulled off a first-quarter 2022 earnings surprise of 18.4% on substantial recapturing of credit losses. Earnings per share of $3.29, on an as-adjusted basis (excluding pre-tax integration costs related to the BBVA USA acquisition), surpassed the Zacks Consensus Estimate of $2.78. However, the bottom-line decreased 20% year over year.
Higher net interest income, driven by interest-earning assets and loan growth, were tailwinds. However, higher expenses and a decline in deposits dragged results.
Net income for the first quarter was $1.43 billion, lower than $1.83 billion in the prior-year quarter.
Quarterly Revenues Improve, Expenses Rise
Total revenues in the reported quarter were $4.69 billion, up 11% year over year. However, the top line missed the Zacks Consensus Estimate of $4.74 billion.
Net interest income improved 19% from the year-ago quarter to $2.8 billion. The upswing is attributable to higher interest-earning assets, partially offset by lower securities yields. The net interest margin increased one basis point to 2.28%.
Non-interest income grew 1% year over year to $1.9 billion on higher asset management and brokerage fees, card and cash management revenues, and service charges on deposits, offset by a decline in income from capital markets revenues, residential and commercial mortgage revenues and other non-interest income.
PNC Financial’s non-interest expenses totaled $3.17 billion, up 23% from the year-ago figure. The increase primarily resulted from the rise in operating expenses related to the BBVA USA acquisition.
The efficiency ratio was 68% compared with 61% in the year-ago quarter. A higher efficiency ratio indicates lower profitability.
As of Mar 31, 2022, total loans grew 2% sequentially to $294.5 billion. However, total deposits decreased 2% to $450.2 billion.
Credit Quality Mixed
The company reported the recapture of credit losses of $208 million, lower than the recapture of $551 million in the year-earlier quarter. Non-performing loans increased 7% year over year to $2.3 billion.
Nonetheless, the allowance for loan and lease losses declined 3.3% to $4.6 billion on a year-over-year basis. Net loan charge-offs were $137 million, down 6% year over year.
Capital Position Weak, Profitability Ratios Decline
As of Mar 31, 2022, the Basel III common equity tier 1 capital ratio was 9.9% compared with 12.6% as of Mar 31, 2021.
Return on average assets and average common shareholder’ equity were 1.05% and 11.64%, respectively, compared with 1.58% and 14.31% witnessed in the prior-year quarter.
Capital Deployment Activity
In the first quarter of 2022, PNC Financial returned $1.7 billion capital to shareholders through dividends on common shares of $0.5 billion and 6.4 million share repurchases amounting to $1.2 billion.
Our Viewpoint
PNC Financial gave an impressive performance in the first quarter. The company is well-poised to grow on the back of its diverse revenue mix. With the gradual recovery of the economy, the company’s provisions are being released, which is encouraging. Rising expenses and declining deposit balance are headwinds.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Fifth Third Bancorp (FITB - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Fifth Third’s first-quarter earnings has moved 2.8% lower to 70 cents. This indicates a 24.7% decline from the prior-year quarter.
First Horizon National Corporation (FHN - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for First Horizon’s Q1 earnings has moved 2.9% lower to 34 cents. This indicates a 33.3% decline from the prior-year quarter.
Citizens Financial (CFG - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Citizens Financial’s first-quarter earnings has moved 3% lower to 96 cents. This indicates a 31.9% decline from the prior-year quarter.
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PNC Financial (PNC) Q1 Earnings Beat, Revenues Miss Estimates
The PNC Financial Services Group, Inc. (PNC - Free Report) has pulled off a first-quarter 2022 earnings surprise of 18.4% on substantial recapturing of credit losses. Earnings per share of $3.29, on an as-adjusted basis (excluding pre-tax integration costs related to the BBVA USA acquisition), surpassed the Zacks Consensus Estimate of $2.78. However, the bottom-line decreased 20% year over year.
Higher net interest income, driven by interest-earning assets and loan growth, were tailwinds. However, higher expenses and a decline in deposits dragged results.
Net income for the first quarter was $1.43 billion, lower than $1.83 billion in the prior-year quarter.
Quarterly Revenues Improve, Expenses Rise
Total revenues in the reported quarter were $4.69 billion, up 11% year over year. However, the top line missed the Zacks Consensus Estimate of $4.74 billion.
Net interest income improved 19% from the year-ago quarter to $2.8 billion. The upswing is attributable to higher interest-earning assets, partially offset by lower securities yields. The net interest margin increased one basis point to 2.28%.
Non-interest income grew 1% year over year to $1.9 billion on higher asset management and brokerage fees, card and cash management revenues, and service charges on deposits, offset by a decline in income from capital markets revenues, residential and commercial mortgage revenues and other non-interest income.
PNC Financial’s non-interest expenses totaled $3.17 billion, up 23% from the year-ago figure. The increase primarily resulted from the rise in operating expenses related to the BBVA USA acquisition.
The efficiency ratio was 68% compared with 61% in the year-ago quarter. A higher efficiency ratio indicates lower profitability.
As of Mar 31, 2022, total loans grew 2% sequentially to $294.5 billion. However, total deposits decreased 2% to $450.2 billion.
Credit Quality Mixed
The company reported the recapture of credit losses of $208 million, lower than the recapture of $551 million in the year-earlier quarter. Non-performing loans increased 7% year over year to $2.3 billion.
Nonetheless, the allowance for loan and lease losses declined 3.3% to $4.6 billion on a year-over-year basis. Net loan charge-offs were $137 million, down 6% year over year.
Capital Position Weak, Profitability Ratios Decline
As of Mar 31, 2022, the Basel III common equity tier 1 capital ratio was 9.9% compared with 12.6% as of Mar 31, 2021.
Return on average assets and average common shareholder’ equity were 1.05% and 11.64%, respectively, compared with 1.58% and 14.31% witnessed in the prior-year quarter.
Capital Deployment Activity
In the first quarter of 2022, PNC Financial returned $1.7 billion capital to shareholders through dividends on common shares of $0.5 billion and 6.4 million share repurchases amounting to $1.2 billion.
Our Viewpoint
PNC Financial gave an impressive performance in the first quarter. The company is well-poised to grow on the back of its diverse revenue mix. With the gradual recovery of the economy, the company’s provisions are being released, which is encouraging. Rising expenses and declining deposit balance are headwinds.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
The PNC Financial Services Group, Inc price-consensus-eps-surprise-chart | The PNC Financial Services Group, Inc Quote
Currently, PNC Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Stocks
Fifth Third Bancorp (FITB - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Fifth Third’s first-quarter earnings has moved 2.8% lower to 70 cents. This indicates a 24.7% decline from the prior-year quarter.
First Horizon National Corporation (FHN - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for First Horizon’s Q1 earnings has moved 2.9% lower to 34 cents. This indicates a 33.3% decline from the prior-year quarter.
Citizens Financial (CFG - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Citizens Financial’s first-quarter earnings has moved 3% lower to 96 cents. This indicates a 31.9% decline from the prior-year quarter.