Saturday, January 16, 2016

PNC Closes 2015 Out Strong; China & Oil Weigh on Markets

PNC posted diluted earnings per share of $1.87 which surpassed Street estimates of $1.80. This represents an earnings surprise of 3.9% and growth of 1.6% from the same quarter in the prior year. Results were mainly driven by lower expenses, which unfortunately were offset by lower revenues and higher provisions for credit losses and net charge offs. Despite the positive report, the results were masked by worries in China and oil with each of the main indices down at least 3% in intraday trading. PNC closed the week at $86.36.

Revenue for the quarter came in at $3.85 billion which was down 2.4% from the prior year. The decline was mostly due to a fall in non-interest income but the figure still beat on consensus revenue estimates. Net income in the Retail Banking, Asset Management Group and Non-Strategic Assets Portfolio increased 23.8%, 13.3%, and 23.3%, respectively, from the prior year’s quarter. Net income in the Corporate & Institutional Banking and Other segments declined 4.4% and 33%, respectively.

Net interest income for the quarter was down 0.2% year over year due to lower purchase accounting accretion, despite an increase in core net interest income. PNC’s net interest margin decreased 19 bps to 2.70%. Net charge offs increased 2% year over year to $120 million and provision for credit losses rose 42% to $74 million.

In the quarter, PNC repurchased 5.8 million common shares for $0.5 billion. As of December 31st Basel III common equity tier 1 ratio was 10.7%. Total assets were $358.5 billion, up 3.9% year over year. Total loans and total deposits increased 0.9% and 7.2%, respectively.

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