The PNC Financial Services Group, Inc.
CEO : Mr. William S. Demchak
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q1 | 17.7% YoY | 125.9% | 23.2% | 2023-01-18 |
Rob Reilly says,
Loan Growth
- Loans grew 3% linked quarter to $322 billion due to growth in both commercial and consumer loans.
- Loan yields increased 77 basis points compared to the third quarter, driven by higher interest rates.
- Expect spot loan growth of 2-4% in 2023.
Deposit Balances
- Deposit balances were stable linked quarter at $435 billion and are primarily interest-bearing.
- Overall, our rate paid on interest-bearing deposits increased to 1.07% during the fourth quarter.
- Expect a shift in deposits from non-interest-bearing into interest-bearing as a result of the rising interest rate environment.
Revenue Trends
- Total revenue was a record $21.1 billion and grew 10% or $2 billion compared to 2021.
- Net interest income increased 22% due to higher interest rates and strong loan growth.
- Non-interest income declined 5%, more than offset by strong card and cash management growth.
Expenses and Cost Savings
- Fourth quarter expenses were up $194 million or 6% linked quarter, largely in personnel costs related to increased business activity.
- Exceeded 2022 goal of $300 million in cost savings through continuous improvement program and will increase annual CIP goal to $400 million in 2023.
- Expect expenses to be up between 2% and 4% in 2023.
Credit Metrics
- Non-performing loans decreased 4% linked quarter and continue to represent less than 1% of total loans.
- Net charge-offs for loans and leases were $224 million, an increase of $105 million linked quarter.
- Provision for the fourth quarter was $408 million, reflecting the impact of a weaker economic outlook as well as continued loan growth.
Bill Demchak says,
Strong Financial Performance in 2022
- Reported net income of $6.1 billion or $13.85 per share for the full year.
- Grew loans and generated record revenue during a rising rate environment.
- Controlled expenses resulting in substantial positive operating leverage for the full year.
Fourth Quarter Results
- Generated $1.5 billion of net income or $3.47 per share.
- 4% increase in revenue driven by growth in net interest income and fee income.
- Expenses were up 6%, primarily due to increased compensation from elevated business activity.
- Average loans grew 3% during the quarter, driven by growth in both commercial and consumer.
Loan Loss Provision and Credit Quality Metrics
- Operating the company with the expectation for a shallow recession in 2023.
- This outlook drove an increase in the loan loss provision in the quarter and a modest build in reserves under the CECL methodology.
- Credit environment continues to trend towards normalized levels, and overall credit quality metrics remain solid.
Capital Return and Growth Opportunities
- Returned $1.2 billion of capital to shareholders through share repurchases and dividends during the quarter.
- BBVA influence markets continue to exceed expectations with powerful growth opportunities across lines of business.
- Generating new customer relationships, and quality of bankers hired is impressive.
Conclusion
- Solid fourth quarter as the company further built on post-acquisition momentum, delivered for customers and communities, and put themselves in a position of strength as they move into 2023.
- Employees thanked for everything they do to make success possible.
Q & A sessions,
Strong Financial Performance in 2022
- Reported $6.1 billion in net income or $13.85 per share for the full year 2022
- Grew loans and generated record revenue during a rapidly rising rate environment while controlling expenses
- Generated $1.5 billion of net income or $3.47 per share in Q4 2022
Loan Growth and Credit Quality
- Average loans grew 3% during the quarter, driven by growth in both commercial and consumer
- For the full year, average loans were up 15%, and the loan book continues to grow in a disciplined manner
- Operating the company with the expectation for a shallow recession in 2023, resulting in an increase in loan loss provision and a modest build in reserves under the CECL methodology
- Credit quality metrics remain solid despite an outsized loss on one commercial credit in Q4 2022
Liquidity and Capital Return
- Deposits remain relatively stable, and wholesale borrowings have been increased to bolster liquidity
- Returned $1.2 billion of capital to shareholders through share repurchases and dividends during the quarter, bringing the total annual capital return to $6 billion
Outlook for 2023
- Operating the company with the expectation for a shallow recession in 2023
- Difficulty in earning expected spreads on new loan production
- Guidance for next year is tempered by the uncertainty of spreads rising on loans or CECL analysis being wrong
BBVA Influence Markets and Growth Opportunities
- Progress within the BBVA influence markets continues to exceed expectations
- Powerful growth opportunities seen across various lines of business in these new markets
- New customer relationships being generated, and the quality of bankers hired has been impressive
No bad stock 