Key Takeaways:
- PNC Q2 adjusted EPS of $4.85 beat the $4.45 consensus by 8.9%.
- Revenue hit a record $6.88 billion, topping estimates by nearly 7%.
- Board raised the quarterly dividend 18% to $2.00 per share.
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PNC beats Q2 estimates on record revenue, raises dividend 18%
PNC Financial Services reported Q2 EPS of $4.85, beating estimates by 8.9%, on record revenue of $6.88 billion.
"The strong second quarter performance reflects the disciplined execution of our growth strategy and positions us well for the second half of the year," Bill Demchak, PNC chairman and chief executive officer, said.
Net interest income rose 4% from the prior quarter to $4.11 billion, with net interest margin expanding 1 basis point to 2.96%. Fee income climbed 10% to $2.28 billion, driven by record capital markets and advisory revenue of $577 million, including record merger and acquisition advisory fees. Average loans grew 4% to $363.2 billion, led by a 5% increase in commercial loans, while average deposits held steady at $457 billion. The bank posted a return on average tangible common equity of 17.88% and pretax pre-provision earnings of $2.78 billion, up 16% from the first quarter.
The board raised the quarterly dividend 30 cents, or 18%, to $2.00 per share, effective in the third quarter. PNC returned $1.3 billion to shareholders in the quarter, including $600 million in share repurchases. The common equity tier 1 ratio stood at 9.9%, down from 10.1% in the prior quarter. The bank completed the conversion of FirstBank's approximately 780,000 customers, 1,620 employees and 95 branches across Colorado and Arizona on June 22, bringing the full-quarter benefit of the acquisition into results.
Provision for credit losses totaled $191 million, down from $210 million in the first quarter, with net charge-offs of $226 million, or 0.25% of average loans on an annualized basis. Nonperforming loans fell 10% to $2.03 billion, driven by lower commercial real estate nonperforming loans. The allowance for credit losses to total loans was 1.48%.
The EPS beat and dividend increase signal management's confidence in sustaining momentum from the FirstBank integration and capital markets strength. Investors will watch for further share repurchase activity in the third quarter, which PNC said is expected to approximate second-quarter levels.
This article is for informational purposes only and does not constitute investment advice.
