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PNC Financial (PNC) Ups Dividend, Expects SCB to Dip to 2.5%
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After passing the 2023 stress test, The PNC Financial Services Group, Inc. (PNC - Free Report) has announced that it expects its Stress Capital Buffer (SCB), effective from Oct 1, 2023, to decrease to 2.5% from 2.9%.
With a lower SCB, a company typically has higher flexibility to deploy capital in share buybacks and dividends. Accordingly, PNC announced a hike in its quarterly dividend. The company declared a quarterly cash dividend of $1.55 per share, marking an increase of 3.3% from the prior payout. The dividend will be paid out on Aug 5 to shareholders of record on Jul 17.
PNC’s chief executive officer William S. Demchak stated, "The increase in our dividend reflects the continued strength of our capital and liquidity levels, and our board's confidence in our strategy and outlook."
Prior to this, PNC Financial hiked its dividend by 20% to $1.5 per share in April 2022.
Considering the last day’s closing price of $127.53, PNC’s dividend yield currently stands at 4.86%. The yield is significantly impressive compared with the industry average of 4.43%. The yield, representing a steady income stream, attracts investors.
This aside, PNC announced a 100 million common stock repurchase program in the second quarter of 2022. In first-quarter 2023, 2.4 million shares were repurchased for $0.4 billion, with 47% of the total authorization remaining under the plan. Apart from reflecting the company’s commitment to returning value to shareholders such efforts indicate its healthy position to endure severe economic downturns.
However, given the likelihood of stringent regulatory capital requirements and ambiguity over the macroeconomic backdrop, including probable recession next year, PNC is expected to reduce its share repurchase activity in the third quarter of 2023 compared with the prior quarters.
Over the past six months, shares of PNC have lost 22.2% compared with a fall of 8.1% of the industry it belongs to.
Other Banks With Enhanced Capital Deployment Plans
U.S. banks, including JPMorgan (JPM - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) , said on Friday that they would return more cash to shareholders after the clearance of the 2023 stress test.
JPM, the largest U.S. bank, intends to raise the quarterly dividend by 5% to $1.05 per share. This follows no change in dividend payout last year.
Likewise, GS announced plans to hike dividend from the current $2.50 per share to $2.75. Notably, the stress test determined GS’ SCB at 5.5%, resulting in a minimum Standardized Common Equity Tier 1 ratio requirement of 13%.
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PNC Financial (PNC) Ups Dividend, Expects SCB to Dip to 2.5%
After passing the 2023 stress test, The PNC Financial Services Group, Inc. (PNC - Free Report) has announced that it expects its Stress Capital Buffer (SCB), effective from Oct 1, 2023, to decrease to 2.5% from 2.9%.
With a lower SCB, a company typically has higher flexibility to deploy capital in share buybacks and dividends. Accordingly, PNC announced a hike in its quarterly dividend. The company declared a quarterly cash dividend of $1.55 per share, marking an increase of 3.3% from the prior payout. The dividend will be paid out on Aug 5 to shareholders of record on Jul 17.
PNC’s chief executive officer William S. Demchak stated, "The increase in our dividend reflects the continued strength of our capital and liquidity levels, and our board's confidence in our strategy and outlook."
Prior to this, PNC Financial hiked its dividend by 20% to $1.5 per share in April 2022.
Considering the last day’s closing price of $127.53, PNC’s dividend yield currently stands at 4.86%. The yield is significantly impressive compared with the industry average of 4.43%. The yield, representing a steady income stream, attracts investors.
This aside, PNC announced a 100 million common stock repurchase program in the second quarter of 2022. In first-quarter 2023, 2.4 million shares were repurchased for $0.4 billion, with 47% of the total authorization remaining under the plan. Apart from reflecting the company’s commitment to returning value to shareholders such efforts indicate its healthy position to endure severe economic downturns.
However, given the likelihood of stringent regulatory capital requirements and ambiguity over the macroeconomic backdrop, including probable recession next year, PNC is expected to reduce its share repurchase activity in the third quarter of 2023 compared with the prior quarters.
Over the past six months, shares of PNC have lost 22.2% compared with a fall of 8.1% of the industry it belongs to.
Image Source: Zacks Investment Research
PNC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks With Enhanced Capital Deployment Plans
U.S. banks, including JPMorgan (JPM - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) , said on Friday that they would return more cash to shareholders after the clearance of the 2023 stress test.
JPM, the largest U.S. bank, intends to raise the quarterly dividend by 5% to $1.05 per share. This follows no change in dividend payout last year.
Likewise, GS announced plans to hike dividend from the current $2.50 per share to $2.75. Notably, the stress test determined GS’ SCB at 5.5%, resulting in a minimum Standardized Common Equity Tier 1 ratio requirement of 13%.