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Can PNC Financial Capitalize on the Fed's Recent Rate Cut?
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Key Takeaways
PNC projects 1% average loan growth for 3Q25, supporting NII expansion.
Management forecasts a 3% sequential NII increase in 3Q25 and 7% growth for the year.
Citigroup raised its 2025 NII growth view to 4%, while BAC targets 6-7% NII improvement.
The PNC Financial Services Group, Inc.’s (PNC - Free Report) net interest income (NII) is influenced by the Federal Reserve’s interest rate trajectory. This month, at the end of a two-day FOMC meeting, the central bank kicked off an easing cycle and lowered interest rates by 25 basis points (bps) to 4.00-4.25%, marking the end of a nine-month pause. The Fed officials hinted at two more rate cuts this year, which will bring rates down to 3.50-3.75% by December.
When the Fed trimmed interest rates by 100 bps last year, it supported PNC’s NII expansion. The metric rose 7.1% year over year in the first half of 2025, driven by loan growth and the continued benefit of fixed-rate asset repricing. With the current rate cut and expectations for further easing, the company appears well-positioned for near-term NII expansion.
Management expects a 1% rise in average loans in the third quarter of 2025 from the $322.8 billion reported in the second quarter and projects a 1% year-over-year increase for 2025. This growth, coupled with a gradual decline in funding costs and strategic asset repricing, supports PNC Financial’s forecast of a 3% increase in NII in the third quarter of 2025 on a sequential basis, and a 7% rise for 2025.
How PNC’s Peers Are Expected to Fare in Terms of NII
Citigroup (C - Free Report) demonstrated resilience and steady growth in NII. In the first half of 2025, the company’s NII rose 8% year over year to $29.2 million, primarily driven by an increase in average deposit and loan balances, as well as higher deposit spreads.
Going forward, Citigroup’s NII outlook remains favorable, and it raised its 2025 NII guidance (excluding Markets). The bank expects NII to grow 4% year over year, up from the previously mentioned 2-3% rise. In 2024, Citigroup’s NII was $54.9 billion.
Meanwhile, Bank of America (BAC - Free Report) remains one of the most rate-sensitive U.S. banks, and with the Fed's latest interest rate cut and expectations for further easing, its NII could face headwinds next year.
Management remains constructive on the outlook. Despite the Fed's monetary policy easing, BAC expects to finish 2025 with record-high NII, underpinned by a strong credit environment, steady deposit inflows, and disciplined capital deployment. For 2025, Bank of America projects a 6-7% increase in NI. For the third quarter of 2025, the bank expects NII to rise 2.5% sequentially to $15.2 billion.
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Can PNC Financial Capitalize on the Fed's Recent Rate Cut?
Key Takeaways
The PNC Financial Services Group, Inc.’s (PNC - Free Report) net interest income (NII) is influenced by the Federal Reserve’s interest rate trajectory. This month, at the end of a two-day FOMC meeting, the central bank kicked off an easing cycle and lowered interest rates by 25 basis points (bps) to 4.00-4.25%, marking the end of a nine-month pause. The Fed officials hinted at two more rate cuts this year, which will bring rates down to 3.50-3.75% by December.
When the Fed trimmed interest rates by 100 bps last year, it supported PNC’s NII expansion. The metric rose 7.1% year over year in the first half of 2025, driven by loan growth and the continued benefit of fixed-rate asset repricing. With the current rate cut and expectations for further easing, the company appears well-positioned for near-term NII expansion.
Management expects a 1% rise in average loans in the third quarter of 2025 from the $322.8 billion reported in the second quarter and projects a 1% year-over-year increase for 2025. This growth, coupled with a gradual decline in funding costs and strategic asset repricing, supports PNC Financial’s forecast of a 3% increase in NII in the third quarter of 2025 on a sequential basis, and a 7% rise for 2025.
How PNC’s Peers Are Expected to Fare in Terms of NII
Citigroup (C - Free Report) demonstrated resilience and steady growth in NII. In the first half of 2025, the company’s NII rose 8% year over year to $29.2 million, primarily driven by an increase in average deposit and loan balances, as well as higher deposit spreads.
Going forward, Citigroup’s NII outlook remains favorable, and it raised its 2025 NII guidance (excluding Markets). The bank expects NII to grow 4% year over year, up from the previously mentioned 2-3% rise. In 2024, Citigroup’s NII was $54.9 billion.
Meanwhile, Bank of America (BAC - Free Report) remains one of the most rate-sensitive U.S. banks, and with the Fed's latest interest rate cut and expectations for further easing, its NII could face headwinds next year.
Management remains constructive on the outlook. Despite the Fed's monetary policy easing, BAC expects to finish 2025 with record-high NII, underpinned by a strong credit environment, steady deposit inflows, and disciplined capital deployment. For 2025, Bank of America projects a 6-7% increase in NI. For the third quarter of 2025, the bank expects NII to rise 2.5% sequentially to $15.2 billion.