Yahoo Finance PNC Financial (PNC) Q1 Earnings Beat Estimates on Higher NII
The PNC Financial Services Group, Inc.’s PNC first-quarter 2023 earnings per share of $3.98 surpassed the Zacks Consensus Estimate of $3.60 and improved 21% year over year. Per our estimate, the metric was $3.64 per share.
Shares of PNC rose 1.1% in pre-market trading following better-than-expected results. A full-day trading session will depict a clearer picture.
Results were aided by an increase in net interest income (NII), supported by higher rates and loan growth. However, rising expenses and higher provisions were headwinds.
Net income was $1.69 billion, higher than $1.43 billion in the prior-year quarter. Our model estimated this to be $1.62 billion.
Revenues and Expenses Rise
Total quarterly revenues were $5.6 billion, up 19.4% year over year. The top line matched the Zacks Consensus Estimate. We expected the figure to be $5.63 billion.
Quarterly NII was $3.59 billion, improved 27.9% from the year-ago quarter. The upswing is attributable to higher interest-earning asset yields and balances, partially offset by higher funding costs. The net interest margin increased 56 basis points to 2.84%. Our estimate for the metric was $3.63 billion.
Non-interest income increased 6.9% year over year to $2.02 billion. Growth in business operations across the franchise along with higher private equity revenues have resulted in the upsurge, partially offset by the impact of lower average equity markets during the quarter. Except asset management and brokerage fees, all fee income components witnessed growth. Our estimate was $2 billion.
Non-interest expenses totaled $3.32 billion, increasing 4.7% from the year-ago figure. All cost components, excep occupancy costs, increased.
The efficiency ratio was 59% compared with 68% in the year-ago quarter. A lower efficiency ratio indicates higher profitability.
As of Mar 31, 2023, total loans were $326.48 billion, increased marginally on a sequential basis. Also, total deposits increased marginally from the end of the previous quarter to $436.83 billion.
Credit Quality: A Mixed Bag
The company reported provision for credit losses of $235 million in the first quarter against the recapture of credit losses of $208 million in the year-earlier quarter. Net loan charge-offs were $195 million, up 42.3% year over year. Also, the allowance for credit losses increased 4.2% to $5.41 billion.
Nonetheless, non-performing loans decreased 12.5% year over year to $2.01 billion.
Capital Position Weakens, Profitability Ratios Improve
As of Mar 31, 2023, the Basel III common equity tier 1 capital ratio was 9.2% compared with 9.9% as of Mar 31, 2022.
Return on average assets and average common shareholders’ equity were 1.22% and 16.11%, respectively, compared with 1.05% and 11.64% witnessed in the prior-year quarter.
Capital Deployment Activity
In the first quarter of 2023, PNC Financial returned $1 billion of capital to shareholders through dividends on common shares of $0.6 billion and share repurchases amounting to $0.4 billion.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse revenue mix. Its balance sheet strength is likely to aid financials. However, the rise in expenses as well as higher provisions are worrisome.
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).
Earnings Dates & Expectations of Other Banks
Webster Financial WBS is scheduled to announce first-quarter 2023 numbers on Apr 20. Over the past week, the Zacks Consensus Estimate for WBS’ quarterly earnings has moved marginally south to $1.56 per share, implying a 25.8% rise from the prior-year reported number. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Texas Capital Bancshares TCBI is scheduled to announce first-quarter 2023 numbers on Apr 20. Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved marginally upward to 89 cents per share, implying a 29% rise from the prior-year reported number.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
Texas Capital Bancshares, Inc. (TCBI) : Free Stock Analysis Report
Webster Financial Corporation (WBS) : Free Stock Analysis Report
