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PNC Financial's (PNC) Q4 Earnings Beat Estimates, Costs Up
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The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2023 adjusted earnings per share of $3.16 surpassed the Zacks Consensus Estimate of $2.99. However, the bottom line reflects an 8.9% decline year over year.
Results were aided by a rise in loan balances and an improvement in the company’s credit quality. However, an increase in non-interest expenses and lower net interest income (NII) were headwinds.
Net income was $883 million, plunging 43% from the prior-year quarter.
For 2023, adjusted earnings of $14.10 per share surpassed the Zacks Consensus Estimate of $13.88. The bottom line inched up 1.8% year over year. Net income was $5.65 billion, lower than $6.11 billion in the prior-year period.
Revenues Fall, Expenses Rise
Total quarterly revenues were $5.36 billion, down 7% year over year. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $5.28 billion.
For 2023, revenues were $21.49 billion, up 1.8% year over year. Also, the top line beat the Zacks Consensus Estimate of $21.43 billion.
Quarterly NII was $3.4 billion, which declined 7.6% from the year-ago quarter. Net interest margin (NIM) decreased 26 basis points to 2.66%. Our estimate for NII and NIM was $3.36 billion and 2.54%, respectively.
Non-interest income fell 5.8% year over year to $1.96 billion. The downtick was due to a decline in income from capital markets and advisory as well as residential and commercial mortgage fees. Our estimate was $1.88 billion.
Non-interest expenses totaled $4.07 billion, increasing 17.3% from the year-ago figure. All cost components decreased, except occupancy, equipment and marketing costs.
The efficiency ratio was 76% compared with 60% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, total loans were $321.51 billion, which increased 1% on a sequential basis. Our estimate for total loans was $339.91 billion. However, total deposits decreased nearly 1% from the end of the previous quarter to $421.42 billion. Our estimate for total deposits was $434.54 billion.
Credit Quality – Mixed Bag
The allowance for credit losses increased 1% to $5.45 billion. Non-performing loans increased 9.8% year over year to $2.18 billion.
Nonetheless, the company reported a provision for credit losses of $232 million in the fourth quarter, lower than $408 million in the year-earlier quarter. Also, net loan charge-offs were $200 million, down 10.7% year over year.
Capital Position Improves & Profitability Ratios Weaken
As of Dec 31, 2023, the Basel III common equity tier 1 capital ratio was 9.9% compared with 9.1% as of Dec 31, 2022.
Return on average assets and average common shareholders’ equity were 0.62% and 6.93%, respectively, compared with 1.10% and 14.19% witnessed in the prior-year quarter.
Capital Distribution Activity
In the fourth quarter of 2023, PNC Financial returned $0.7 billion of capital to shareholders through dividends on common shares and share repurchases.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, a solid balance sheet position supports its strategic acquisitions. However, continued decline in fee income and higher expenses are concerning.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded loss per share of $1.16. It registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
It witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, a decline in NII, worsening credit quality and a dip in loan balances were the undermining factors for WFC.
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PNC Financial's (PNC) Q4 Earnings Beat Estimates, Costs Up
The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2023 adjusted earnings per share of $3.16 surpassed the Zacks Consensus Estimate of $2.99. However, the bottom line reflects an 8.9% decline year over year.
Results were aided by a rise in loan balances and an improvement in the company’s credit quality. However, an increase in non-interest expenses and lower net interest income (NII) were headwinds.
Net income was $883 million, plunging 43% from the prior-year quarter.
For 2023, adjusted earnings of $14.10 per share surpassed the Zacks Consensus Estimate of $13.88. The bottom line inched up 1.8% year over year. Net income was $5.65 billion, lower than $6.11 billion in the prior-year period.
Revenues Fall, Expenses Rise
Total quarterly revenues were $5.36 billion, down 7% year over year. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $5.28 billion.
For 2023, revenues were $21.49 billion, up 1.8% year over year. Also, the top line beat the Zacks Consensus Estimate of $21.43 billion.
Quarterly NII was $3.4 billion, which declined 7.6% from the year-ago quarter. Net interest margin (NIM) decreased 26 basis points to 2.66%. Our estimate for NII and NIM was $3.36 billion and 2.54%, respectively.
Non-interest income fell 5.8% year over year to $1.96 billion. The downtick was due to a decline in income from capital markets and advisory as well as residential and commercial mortgage fees. Our estimate was $1.88 billion.
Non-interest expenses totaled $4.07 billion, increasing 17.3% from the year-ago figure. All cost components decreased, except occupancy, equipment and marketing costs.
The efficiency ratio was 76% compared with 60% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, total loans were $321.51 billion, which increased 1% on a sequential basis. Our estimate for total loans was $339.91 billion. However, total deposits decreased nearly 1% from the end of the previous quarter to $421.42 billion. Our estimate for total deposits was $434.54 billion.
Credit Quality – Mixed Bag
The allowance for credit losses increased 1% to $5.45 billion. Non-performing loans increased 9.8% year over year to $2.18 billion.
Nonetheless, the company reported a provision for credit losses of $232 million in the fourth quarter, lower than $408 million in the year-earlier quarter. Also, net loan charge-offs were $200 million, down 10.7% year over year.
Capital Position Improves & Profitability Ratios Weaken
As of Dec 31, 2023, the Basel III common equity tier 1 capital ratio was 9.9% compared with 9.1% as of Dec 31, 2022.
Return on average assets and average common shareholders’ equity were 0.62% and 6.93%, respectively, compared with 1.10% and 14.19% witnessed in the prior-year quarter.
Capital Distribution Activity
In the fourth quarter of 2023, PNC Financial returned $0.7 billion of capital to shareholders through dividends on common shares and share repurchases.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, a solid balance sheet position supports its strategic acquisitions. However, continued decline in fee income and higher expenses are concerning.
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 #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded loss per share of $1.16. It registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
It witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, a decline in NII, worsening credit quality and a dip in loan balances were the undermining factors for WFC.