PNC Financial Services Group Inc.’s stock fell 3% in premarket trading Tuesday, after the regional bank missed its second-quarter revenue target.
Pittsburgh-based PNC
PNC,
said net income for the three months ending June 30 rose to $1.5 billion, or $3.36 a share, compared with $1.496 billion, or $3.39 a share, in the year-earlier period. The bank beat the analyst profit forecast of $3.29 a share by seven cents a share.
Revenue increased to $5.293 billion from $5.116 billion but was below the expectation of $5.449 billion.
Jefferies analyst Ken Usdin said PNC’s third-quarter outlook has implied potential preprovision net revenue of $1.97 billion, below the consensus estimate of $2.07 billion, on lower revenues. PNC’s net interest income is expected to drop by 3% to 4% in the coming quarter, he said.
Usdin reiterated a hold rating on PNC and said the firm’s second-quarter preprovision net revenue was below consensus targets on lower fees, which was partially offset by better net interest income.
Looking back at the second quarter, net interest income of $3.5 billion fell by $75 million, or 2%, from the previous quarter. PNC said increased funding costs as well as lower loan and securities balances offset higher yields on interest-earning assets.
Loans were stable but deposits fell by 2%, the bank said in a statement. Net interest margins fell by 5 basis points.
Average loans increased 4%, with growth in residential-mortgage, home-equity, commercial and credit-card loans.
Fee income declined by 6% amid a $58 million decline in mortgage servicing. Noninterest income fell 50%.
The bank set aside $146 million for loan losses, down from $235 million in the first quarter. The stock has fallen 19% in the year to date, while the S&P 500
SPX,
has gained 17.8%.
Also on Tuesday, Bank of America Corp.
BAC,
and Morgan Stanley
MS,
released second-quarter earnings results that topped expectations.
Also read: Bank of America’s stock rises after second-quarter earnings and revenue beat expectations
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