10-QPeriod: Q2 FY2017

PNC FINANCIAL SERVICES GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 2, 2017For Securities:PNC

Summary

The PNC Financial Services Group, Inc. reported solid results for the second quarter of 2017, with net income of $1.1 billion, or $2.10 per diluted common share, an increase of 11% compared to the prior year quarter. Total revenue grew 7% to $4.1 billion, driven by a 9% increase in net interest income to $2.3 billion, supported by higher loan yields and loan growth, as well as increased securities balances. The net interest margin also improved to 2.84% from 2.70% in the prior year quarter. Asset quality remained stable, with a decrease in nonperforming assets by 9% to $2.2 billion. The company maintained a strong capital position, with a Transitional Basel III Common Equity Tier 1 capital ratio of 10.3%. PNC also demonstrated a commitment to shareholder returns, repurchasing $0.7 billion of common stock and declaring a quarterly cash dividend of $0.55 per share, with a subsequent increase to $0.75 per share announced in July 2017. The company is optimistic about the economic outlook, expecting moderate GDP growth and a potential interest rate hike by the Federal Reserve later in the year.

Financial Highlights

31 data points
Beta

Revenue

$4.06B

Net Income

$1.10B

27.0% Net Margin

EPS (Diluted)

$2.10

Total Assets

$372.19B

Free Cash Flow

$630.00M

Financial Statements
Beta
Revenue$4.06B
Interest Expense$416.00M
Net Income$1.10B
EPS (Basic)$2.12
EPS (Diluted)$2.10
Shares Outstanding (Basic)484.00M
Shares Outstanding (Diluted)488.00M

Key Highlights

  • 1Net income increased by 11% year-over-year to $1.1 billion.
  • 2Diluted earnings per common share rose by 15% year-over-year to $2.10.
  • 3Total revenue grew 7% to $4.1 billion, driven by higher net interest income and noninterest income.
  • 4Net interest margin improved to 2.84% from 2.70% in the prior year quarter.
  • 5Provision for credit losses decreased by 23% year-over-year to $98 million.
  • 6Total loans increased by 3% to $218.0 billion, primarily driven by commercial lending growth.
  • 7PNC returned $1.0 billion to shareholders through share repurchases and dividends in the quarter.

Frequently Asked Questions

PNC's total revenue increased by 7% to $4.1 billion in the second quarter of 2017 compared to the second quarter of 2016. This growth was primarily driven by a 9% increase in net interest income and a 4% increase in noninterest income.

PNC's credit quality remained stable. Nonperforming assets decreased by 9% to $2.2 billion as of June 30, 2017, compared to December 31, 2016. Loan delinquencies also decreased by 16% during the same period.

PNC maintained a strong capital position with a Transitional Basel III Common Equity Tier 1 capital ratio of 10.3% at June 30, 2017. In the second quarter of 2017, PNC returned $1.0 billion to shareholders through share repurchases ($0.7 billion) and dividends ($0.3 billion). The company also announced an increase in its quarterly cash dividend on common stock to $0.75 per share, effective with the August 2017 dividend.

The Corporate & Institutional Banking segment showed strong earnings growth. The Retail Banking segment experienced a decrease in earnings due to lower noninterest income and increased noninterest expense. The Asset Management Group saw a slight increase in earnings, driven by higher noninterest income. PNC's investment in BlackRock also contributed positively to earnings.