PNC Financial Services Group, Inc.
The bank reported a revenue increase of 2% Y/Y to $5.411 billion, slightly missing the consensus of $5.412 billion. Revenue increased Y/Y led by higher noninterest income.
Net interest income fell 6% Y/Y to $3.30 billion, with a net interest margin declining to 2.60% from 2.79% prior year quarter due to increased funding costs and lower loan balances.
Noninterest income grew 18% Y/Y to $2.11 billion, led by higher fee income on growth across all categories.
Average loans fell 1% Y/Y, and average deposits decreased 2% Y/Y in the second quarter. Adjusted EPS of $3.30 topped the consensus of $2.98.
The company reported a provision for credit losses of $235 million in the quarter (vs. $146 million a year ago), reflecting portfolio activity. CET1 capital ratio stood at 10.2% vs. 9.5% in the prior year quarter.
During the second quarter of 2024, PNC engaged in the Visa exchange program, enabling it to monetize 50% of its Visa Class B-1 shares and converting the remainder into 1.8 million Visa Class B-2 shares, resulting in a gain of $754 million.
Dividend: On July 2, PNC's board of directors increased a quarterly cash dividend per share to $1.60 (from $1.55), payable on August 5, 2024, to shareholders of record as of July 15, 2024.
PNC returned $0.7 billion of capital to shareholders, comprising share repurchases over $0.1 billion in the quarter.
Bill Demchak, Chairman and CEO, said, "PNC delivered strong results in the second quarter; generating positive operating leverage through revenue growth and well controlled expenses while adding customers, and strengthening our capital levels. Importantly, net interest income and net interest margin increased, marking the beginning of our growth trajectory towards expected record NII in 2025."
"In June, the Federal Reserve announced the results of the annual stress test and PNC's start-to-trough CET1 ratio depletion was 1.6%, the best in our peer group."
Guidance: For FY24, PNC expects revenue to be down 1%-2%, with net interest income declining 4% and average loan down less than 1%.
For the third quarter, the bank expects average loans to be stable and net interest income to be up 1%-2%.
Investors can gain exposure to the stock via IShares U.S. Regional Banks ETF
Price Action: PNC shares are up 0.22% at $169.40 premarket at the last check Tuesday.
