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PNC Financial (PNC) Q3 Earnings Beat Estimates, Stock Down
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The PNC Financial Services Group, Inc.’s (PNC - Free Report) third-quarter 2023 earnings per share of $3.60 surpassed the Zacks Consensus Estimate of $3.18. However, the bottom line reflects a 4.8% decline year over year.
Shares of PNC fell 1.5% in pre-market trading, despite better-than-expected results. A full-day trading session will depict a clearer picture.
Results were aided by a fall in non-interest expenses and lower provisions. However, a decrease in net interest income (NII) and non-interest income were headwinds.
Net income was $1.57 billion, decreasing 4.3% from the prior-year quarter. Our model estimated net income to be $1.39 billion.
Revenues and Expenses Fall
Total quarterly revenues were $5.23 billion, down 5.7% year over year. The top line missed the Zacks Consensus Estimate of $5.31 billion.
Quarterly NII was $3.42 billion, which declined 1.6% from the year-ago quarter. Net interest margin (NIM) decreased 11 basis points to 2.71%. Our estimate for NII and NIM was $3.38 billion and 2.72%, respectively.
Non-interest income fell 12.5% year over year to $1.82 billion. The decline was due to a fall in almost all fee income components, except for card and cash management fees, lending and deposit services fees, and residential and commercial mortgage fees. Our estimate was $1.97 billion.
Non-interest expenses totaled $3.25 billion, decreasing 1.1% from the year-ago figure. All cost components decreased, except occupany costs and equipment costs. Our estimate for total non-interest expenses was $3.38 billion.
The efficiency ratio was 62% compared with 59% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Sep 30, 2023, total loans were $318.42 billion, which decreased 1% on a sequential basis. Our estimate for total loans was $321.65 billion. Also, total deposits decreased nearly 1% from the end of the previous quarter to $423.61 billion. Our estimate for total deposits was $429.01 billion.
Credit Quality Worsens
Net loan charge-offs were $121 million, up 1.7% year over year. Also, the allowance for credit losses increased 2.7% to $5.41 billion. Non-performing loans increased 2.7% year over year to $1.12 billion.
Nonetheless, the company reported a provision for credit losses of $129 million in the third quarter, lower than the $241 million reported in the year-earlier quarter.
Capital Position Improves & Profitability Ratios Weaken
As of Sep 30, 2023, the Basel III common equity tier 1 capital ratio was 9.8% compared with 9.3% as of Sep 30, 2022.
Return on average assets and average common shareholders’ equity were 1.12% and 13.65%, respectively, compared with 1.19% and 14.97% witnessed in the prior-year quarter.
Capital Distribution Activity
In the third quarter of 2023, PNC Financial returned $0.6 billion of capital to shareholders through dividends on common shares.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse revenue mix. With higher rates, the company’s NII and margins are expected to increase. A fall in expenses and lower provisions for credit losses are encouraging. However, its continued decline in fee income is a concern. Any deterioration in balance sheet position is likely to affect its financials.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Webster Financial (WBS - Free Report) is scheduled to announce its third-quarter 2023 results on Oct 19.
Over the past week, the Zacks Consensus Estimate for WBS’ quarterly earnings has moved marginally up to $1.50 per share. The estimate indicates a 2.7% increase from the year-ago quarter.
Texas Capital Bancshares (TCBI - Free Report) is slated to release its third-quarter 2023 numbers on Oct 19.
Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has risen nearly 1% to $1.04 per share. The figure implies a 40.5% increase from the prior-year quarter.
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PNC Financial (PNC) Q3 Earnings Beat Estimates, Stock Down
The PNC Financial Services Group, Inc.’s (PNC - Free Report) third-quarter 2023 earnings per share of $3.60 surpassed the Zacks Consensus Estimate of $3.18. However, the bottom line reflects a 4.8% decline year over year.
Shares of PNC fell 1.5% in pre-market trading, despite better-than-expected results. A full-day trading session will depict a clearer picture.
Results were aided by a fall in non-interest expenses and lower provisions. However, a decrease in net interest income (NII) and non-interest income were headwinds.
Net income was $1.57 billion, decreasing 4.3% from the prior-year quarter. Our model estimated net income to be $1.39 billion.
Revenues and Expenses Fall
Total quarterly revenues were $5.23 billion, down 5.7% year over year. The top line missed the Zacks Consensus Estimate of $5.31 billion.
Quarterly NII was $3.42 billion, which declined 1.6% from the year-ago quarter. Net interest margin (NIM) decreased 11 basis points to 2.71%. Our estimate for NII and NIM was $3.38 billion and 2.72%, respectively.
Non-interest income fell 12.5% year over year to $1.82 billion. The decline was due to a fall in almost all fee income components, except for card and cash management fees, lending and deposit services fees, and residential and commercial mortgage fees. Our estimate was $1.97 billion.
Non-interest expenses totaled $3.25 billion, decreasing 1.1% from the year-ago figure. All cost components decreased, except occupany costs and equipment costs. Our estimate for total non-interest expenses was $3.38 billion.
The efficiency ratio was 62% compared with 59% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Sep 30, 2023, total loans were $318.42 billion, which decreased 1% on a sequential basis. Our estimate for total loans was $321.65 billion. Also, total deposits decreased nearly 1% from the end of the previous quarter to $423.61 billion. Our estimate for total deposits was $429.01 billion.
Credit Quality Worsens
Net loan charge-offs were $121 million, up 1.7% year over year. Also, the allowance for credit losses increased 2.7% to $5.41 billion. Non-performing loans increased 2.7% year over year to $1.12 billion.
Nonetheless, the company reported a provision for credit losses of $129 million in the third quarter, lower than the $241 million reported in the year-earlier quarter.
Capital Position Improves & Profitability Ratios Weaken
As of Sep 30, 2023, the Basel III common equity tier 1 capital ratio was 9.8% compared with 9.3% as of Sep 30, 2022.
Return on average assets and average common shareholders’ equity were 1.12% and 13.65%, respectively, compared with 1.19% and 14.97% witnessed in the prior-year quarter.
Capital Distribution Activity
In the third quarter of 2023, PNC Financial returned $0.6 billion of capital to shareholders through dividends on common shares.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse revenue mix. With higher rates, the company’s NII and margins are expected to increase. A fall in expenses and lower provisions for credit losses are encouraging. However, its continued decline in fee income is a concern. Any deterioration in balance sheet position is likely to affect its financials.
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 Banks
Webster Financial (WBS - Free Report) is scheduled to announce its third-quarter 2023 results on Oct 19.
Over the past week, the Zacks Consensus Estimate for WBS’ quarterly earnings has moved marginally up to $1.50 per share. The estimate indicates a 2.7% increase from the year-ago quarter.
Texas Capital Bancshares (TCBI - Free Report) is slated to release its third-quarter 2023 numbers on Oct 19.
Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has risen nearly 1% to $1.04 per share. The figure implies a 40.5% increase from the prior-year quarter.