Retail banking gains one of highlights in PNC's 1Q

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Higher loan yields and fee income offset modest loan growth at PNC Financial Services Group in Pittsburgh.

Net income for the $379 billion-asset PNC was $1.2 billion, a 15% increase from the first quarter of 2017. Earnings per share were $2.43, missing by 1 cent the mean estimate of analysts tracked by FactSet Research Systems.

“Our expanded net interest margin, well-managed expenses and stable credit quality contributed to our results as we maintained strong capital returns,” President and CEO William Demchak said in a press release Friday. “We see loan demand strengthening and look forward to launching our national retail digital strategy as the year goes on.”

Total revenue increased 6% to $4.1 billion.

Net interest income increased 9% to $2.4 billion due to higher loan yields, though some of that was partially offset by higher deposit and borrowing costs. The net interest margin expanded 14 basis points to 2.91%.

Income from PNC’s retail banking segment increased 39% to $296 million. Corporate and institutional banking income increased 20% to $584 million. Asset management group income increased 45% to $68 million.

Total loans increased 4% to $221.6 billion. Average commercial loans grew 6% to $148.2 billion, and average consumer loans grew 1% to $72.9 billion.

Total deposits increased 2% to $264.7 billion. Average retail deposits increased 2% to $160 billion, while average deposits in PNC’s corporate and institutional business segment increased 4% to $87.9 billion.

Noninterest income increased 2% to $1.7 billion. Fee income from asset management, consumer services, corporate services and deposits all increased on a yearly basis, while fee income from residential mortgages and other income declined.

Noninterest expenses increased 4% to $2.5 billion.

Nonperforming loans declined 8% to $1.8 billion, representing 0.83% of total loans, compared with 0.94% a year ago. Net charge-offs in the quarter declined 4% to $113 million.

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