PNC Financial Services Group (NYSE:PNC), Inc. reported a profit of $1.57 billion or $3.60 per share for the third quarter of 2023, surpassing the London Stock Exchange IBES data's expectation of $3.11 per share, according to an announcement made on Friday. Despite beating estimates, this figure marked a decrease from last year's Q3 earnings of $1.64 billion or $3.78 per share.
The lender allocated $129 million for credit losses, a drop from the previous year's allocation of $241 million. This reduction comes amid heightened loan default risks due to the Federal Reserve's quantitative tightening, which has led banks to increase their reserves.
In the third quarter, PNC's net interest income (NII) saw a 1.6% year-on-year decrease to $3.4 billion. With rising borrowing costs and high rates deterring loan applications, the bank anticipates a further 1-2% drop in NII for Q4 compared to this quarter.
The report also highlighted that PNC's banking division had acquired a capital commitments portfolio worth $16.6 billion from Signature Bridge Bank with the Federal Deposit Insurance Corp acting as receiver.
InvestingPro data shows PNC's adjusted market cap is $47.18 billion with a P/E ratio of 8.11. The company's 1-year price total return is -17.19% and the next earnings date is slated for October 13, 2023. The fair value, as per InvestingPro, is $138.92.
InvestingPro Tips reveals that PNC has a high earnings quality, with free cash flow exceeding net income and consistently increasing earnings per share. The bank has raised its dividend for 13 consecutive years and has maintained dividend payments for 53 consecutive years. On the flip side, the bank suffers from weak gross profit margins. It is also worth noting that 9 analysts have revised their earnings downwards for the upcoming period. For more detailed insights, consider subscribing to InvestingPro where you can access 10 additional tips.
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