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The PNC Financial Services Group, Inc. (PNC - Free Report) reported fourth-quarter 2023 earnings per share of $3.16, which surpassed the Zacks Consensus Estimate of $2.99. The outperformance was aided by lower provision for credit losses and adjusted non-interest expenses compared with the year-ago quarter's level.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Lower Provision for Credit Losses & Expenses Fuel Outperformance
Non-interest expenses totaled $4.1 billion in the fourth quarter of 2023. This included the impact of FDIC special assessment and workforce reduction charges of $515 million and $150 million, respectively. Excluding these items, adjusted expenses of $3.41 billion declined 1.8% from the year-ago figure. This reflects PNC’s ongoing focus on expense management.
As part of cost-containment measures, the company is targeting a cost reduction of $725 million in 2024 through a Continuous Improvement Program and workforce reduction. In October 2023, the company began its staff reductions. Through such efforts, it is expecting to reduce $325 million of costs this year.
Apart from lower adjusted expenses, fall in provision for credit losses to $232 million in the fourth quarter of 2023 from $408 million in the year-earlier quarter supported the bottom line. The fall was aided by lower loan balances during the quarter as well as fading recession risks.
Revenue Decline Dampens Results
Total quarterly revenues of $5.36 billion were down 7% year over year. A decline in net interest income (NII) and fee income adversely impacted the top-line performance.
NII totaled $3.4 billion, down 7.6% from the year-ago quarter's level. Interest income fell 5.8% to $1.96 billion.
Lower loan balances and higher funding costs affected NII growth despite the higher interest rate environment. The fee income decline was due to a fall in income from capital markets and advisory as well as residential and commercial mortgage fees.
Thus, revenue decline majorly hurt PNC Financial’s bottom line, which indicated an 8.9% year-over-year dip.
First-Quarter 2024 Outlook
The outlook is relative to fourth-quarter 2023. The company expects average loans to be stable. NII is projected to decline 2-3% while non-interest income is expected to be down 6-8%.
Adjusted non-interest expenses are expected to decrease 3-4%.
Bank OZK (OZK - Free Report) is slated to report fourth-quarter and full-year 2023 results on Jan 18. It has a Zacks Rank #3 (Hold) at present.
Over the past week, the Zacks Consensus Estimate for OZK’s quarterly earnings per share has moved south to $1.45.
First Horizon Corporation (FHN - Free Report) is also scheduled to release fourth-quarter and full-year 2023 earnings on Jan 18. The company carries a Zacks Rank #2 at present.
The consensus estimate for FHN’s quarterly earnings has remained unchanged at 31 cents per share over the past 60 days.
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PNC Financial (PNC) Q4 Earnings Beat on Lower Cost & Provisions
The PNC Financial Services Group, Inc. (PNC - Free Report) reported fourth-quarter 2023 earnings per share of $3.16, which surpassed the Zacks Consensus Estimate of $2.99. The outperformance was aided by lower provision for credit losses and adjusted non-interest expenses compared with the year-ago quarter's level.
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
Lower Provision for Credit Losses & Expenses Fuel Outperformance
Non-interest expenses totaled $4.1 billion in the fourth quarter of 2023. This included the impact of FDIC special assessment and workforce reduction charges of $515 million and $150 million, respectively. Excluding these items, adjusted expenses of $3.41 billion declined 1.8% from the year-ago figure. This reflects PNC’s ongoing focus on expense management.
As part of cost-containment measures, the company is targeting a cost reduction of $725 million in 2024 through a Continuous Improvement Program and workforce reduction. In October 2023, the company began its staff reductions. Through such efforts, it is expecting to reduce $325 million of costs this year.
Apart from lower adjusted expenses, fall in provision for credit losses to $232 million in the fourth quarter of 2023 from $408 million in the year-earlier quarter supported the bottom line. The fall was aided by lower loan balances during the quarter as well as fading recession risks.
Revenue Decline Dampens Results
Total quarterly revenues of $5.36 billion were down 7% year over year. A decline in net interest income (NII) and fee income adversely impacted the top-line performance.
NII totaled $3.4 billion, down 7.6% from the year-ago quarter's level. Interest income fell 5.8% to $1.96 billion.
Lower loan balances and higher funding costs affected NII growth despite the higher interest rate environment. The fee income decline was due to a fall in income from capital markets and advisory as well as residential and commercial mortgage fees.
Thus, revenue decline majorly hurt PNC Financial’s bottom line, which indicated an 8.9% year-over-year dip.
First-Quarter 2024 Outlook
The outlook is relative to fourth-quarter 2023. The company expects average loans to be stable. NII is projected to decline 2-3% while non-interest income is expected to be down 6-8%.
Adjusted non-interest expenses are expected to decrease 3-4%.
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.
Earnings Release Dates of Other Banks
Bank OZK (OZK - Free Report) is slated to report fourth-quarter and full-year 2023 results on Jan 18. It has a Zacks Rank #3 (Hold) at present.
Over the past week, the Zacks Consensus Estimate for OZK’s quarterly earnings per share has moved south to $1.45.
First Horizon Corporation (FHN - Free Report) is also scheduled to release fourth-quarter and full-year 2023 earnings on Jan 18. The company carries a Zacks Rank #2 at present.
The consensus estimate for FHN’s quarterly earnings has remained unchanged at 31 cents per share over the past 60 days.