PNC's Profit Hit by Drop in Asset Management, Investments' Value

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PNC Financial Services Group in Pittsburgh reported lower quarterly profit that reflected a decline in asset management fees and Volcker Rule-mandated devaluation of some investments.

Second-quarter profit at the $361 billion-asset company fell 7% from a year earlier to $914 million, or $1.82 a share. Total revenue fell 1.9% to $3.8 billion.

Net interest income rose 0.8% to $2.07 billion. Total loans rose 2% to $209 billion, while the net interest margin narrowed by 3 basis points to 2.70%.

The loan-loss provision rose 49% to $69 million largely because of weakness in PNC's energy loan portfolio. However, PNC said deterioration in its energy-loan book has slowed, adding that the provision fell 38% from the first quarter.

Noninterest income fell 4.9% to $1.7 billion. Asset management fees dropped 9% to $377 million; PNC cited an unfavorable year-over-year comparison, due to a $30 million trust settlement last year.

PNC was also stung by a $51 million negative valuation adjustment tied to investments that are nonconforming under the Volcker Rule.

Noninterest expense fell 0.3% to $2.36 billion. The efficiency ratio worsened to 62% from 61%.

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