Higher loan yields and fee income drove second-quarter profits at PNC Financial Service Group, offsetting the Pittsburgh bank’s slow loan growth.
Net income for the $372.2 billion-asset PNC rose 10.9% year over year to $1.1 billion. Earnings per share were $2.10, beating analysts’ average estimate of $2.02 per share.
"In the second quarter, PNC grew loans and revenue, and we controlled expenses well," Chairman and CEO William Demchak said in a press release Friday. "We’ve maintained a strong capital position and recently increased our common stock dividend by 36% to an all-time high,” he said, and the company is positioned for “continued success in the current credit and interest rate environment, as well as for the long term.”
Net interest income increased 9.2% to $2.3 billion. The higher loan yields and balances as well as an extra day in the quarter overcame higher borrowing and deposit costs. PNC’s net interest margin increased to 2.84%, compared with 2.70% in the second quarter last year.
Total loans increased 4% to $218 billion. Commercial lending rose 6%, while consumer lending remained largely flat.
Noninterest income increased 4.4% to $1.8 billion. Consumer service fees benefited from seasonally higher debit card, credit card and merchant services activity, while an increase in corporate service fees was the result of higher loan syndication and treasury management fees, the release said.
Noninterest expenses increased 5% to $2.5 billion, driven mainly by ongoing investments in technology and business infrastructure, PNC said.