PNC Boosts Revenue 4.3% as Loans Grow -- WSJ

By Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 13, 2019).

Strong loan growth helped fuel a rise in revenue and profits for PNC Financial Services Group Inc. in the first quarter.

Revenue for PNC, one of the country's largest regional banking companies, rose 4.3% from a year earlier to $4.29 billion. Analysts polled by Refinitiv were expecting $4.27 billion in revenue.

Net interest income rose 4.8% to $2.48 billion. Noninterest income increased 3.5% to $1.81 billion.

PNC reported earnings rose 2.6% to $1.26 billion, or $2.61 a share, which was in line with the consensus from analysts.

PNC's provision for credit losses more than doubled to $189 million, which Chief Executive Bill Demchak attributed to strong loan growth, in prepared remarks Friday. Executives also said the bank's credit quality was strong.

The bank guided its loan-loss provision to be between $125 million and $200 million in the second quarter.

Total loans at PNC rose 4.8%, mainly because of an increase in commercial loans. Consumer lending grew at a slower pace.

Mr. Demchak told analysts during a conference call that clients paid down their loans at a slower pace during the quarter and used more of their lending lines. He said PNC also grew its client base.

The company's net interest margin -- an important measure for banks that highlights their lending profitability -- was 2.98%, up from 2.91% in the comparable quarter a year ago. Net interest margin in the fourth quarter was 2.96%.

Mr. Demchak told analysts that PNC's net interest margin should drop one or two basis points through this year. He said PNC's deposit betas -- the interest PNC pays out to depositors -- was a big variable along with funding costs. Paying out more interest to depositors also impacts banks' net interest margins.

Separately on the call, Mr. Demchak shot down the idea of taking over the CEO job at Wells Fargo & Co. whose former CEO, Tim Sloan, retired just last month.

"I like my job here. I like our company," he said, in response to an analyst's inquiry. "I will end my career here." Mr. Demchak has been with PNC since 2002 and was named CEO in 2013.

Shares in PNC rose 2% to $131.25 in Friday trading. PNC's stock has gained about 12% this year.

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(END) Dow Jones Newswires

April 13, 2019 02:47 ET (06:47 GMT)

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