PNC 2018 Earnings Flat Y/Y, Q4/18 Revenue Down $17MM

PNC reported full year 2018 net income of $5.346 billion, down slightly from $5.388 billion in 2017. Total revenue for the fourth quarter of $4.3 billion declined $17 million.

“2018 was a successful year for PNC,” said Bill Demchak, PNC chairman, president and chief executive officer. “Earnings per share increased, and our returns on average assets and common equity were strong. Record revenue was driven by higher net interest income and noninterest income, and we generated positive operating leverage for the year. We grew loans and deposits, and expanded to new markets with our middle market corporate banking franchise and the successful launch of our national retail digital strategy. Supported by our strong capital and liquidity positions, we are entering 2019 well positioned to create long-term value for our shareholders.”

Income Statement Highlights

  • Q4/18 and full year 2017 net income included a net benefit of $.9 billion from federal tax legislation and significant items.
  • Net income of $1.4 billion for Q4/18 decreased $49 million, or 4%, compared with Q3/18.
  • Total revenue for Q4/18 of $4.3 billion declined $17 million.
  • Net interest income of $2.5 billion increased $15 million, or 1%, due to higher loan and securities yields and balances partially offset by increased funding costs.
  • Fee income declined $56 million, or 4%, to $1.5 billion due to lower asset management revenue driven by a $47 million decrease in earnings from PNC’s equity investment in BlackRock, including a $10 million flow-through impact of BlackRock’s recently announced restructuring charge. Additionally, lower residential mortgage revenue was partially offset by seasonally higher consumer activity.
  • Provision for credit losses was $148 million, an increase of $60 million resulting from a higher commercial loan provision reflecting portfolio growth and a benefit from lower specific reserves in Q3/18.

Balance Sheet Highlights

  • Average loans increased $2.6 billion, or 1%, to $225.9 billion in Q4/18 compared with Q3/18.
  • Average commercial lending balances grew $2.3 billion reflecting seasonal growth in PNC’s multifamily agency warehouse lending within the real estate business and loan growth across the corporate banking, business credit and equipment finance businesses.
  • Overall credit quality remained strong.
  • Nonperforming assets of $1.8 billion at December 31, 2018 decreased $17 million, or 1%, compared with September 30, 2018.
  • Net charge-offs were $107 million for Q4/18 compared with $91 million for Q3/18.

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