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.

Online platform in works
“We see loan demand strengthening and look forward to launching our national retail digital strategy as the year goes on,” PNC CEO William Demchak says. Bloomberg News


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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