Commercial lending climbs 7% at PNC, boosting profits

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Stronger commercial lending and wider margins boosted third-quarter profits at PNC Financial Services Group.

Net income rose 12% from a year earlier to $1.1 billion as the Pittsburgh company overcame lower noninterest income and higher loan-loss provisions. Earnings per share totaled $2.16, beating analysts’ median estimate of $2.13, according to FactSet Research Systems.

"Net interest income increased and our margin expanded as we benefited from higher short-term rates and our well-positioned balance sheet,” Chairman and CEO William Demchak said in a press release. “We continue to focus on disciplined expense management even as we invest in our businesses, and we believe we have additional opportunities to drive further growth and efficiency over the long term."

The $375.2 billion-asset company’s net interest income increased 12% to $2.3 billion, driven primarily by higher loan balances and loan yields. The net interest margin expanded from 2.68% to 2.91% year over year.

Total loans increased 5% to $221.1 billion. Commercial lending grew 7% to $148.5 billion, while consumer lending increased 1% to $72.6 billion.

Those generally strong lending-related figures contributed heavily to an 8% growth in revenue to $4.1 billion.

Noninterest income increased 3% from the year-ago quarter to $1.8 billion, but declined slightly on a linked-quarter basis. On a year-over-year basis, fee income from asset management, consumer services and service charges on deposits increased, while fee income from corporate services and residential mortgages declined.

PNC increased its provision for credit losses by 33% from the second quarter to $130 million, including $10 million of set-asides related to hurricanes Harvey and Irma.

Noninterest expenses increased 3% from the year-ago period to $2.5 billion.

Deposits totaled $260.7 billion at Sept. 30, remaining essentially flat from the year-ago quarter.

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Earnings Commercial lending Net interest margin Interest rates William Demchak PNC PNC Financial Services Group