PNC Financial PNC pulled off third-quarter 2020 positive earnings surprise of 62% on prudent expense management. Earnings per share of $3.39 surpassed the Zacks Consensus Estimate of $2.09. Also, the figure was 15% higher than the prior-year level.
Shares of PNC Financial gained 1.5% in pre-market trading as investors reacted positively to the decline in expenses and lower provisions. A full day’s trading session will depict a better picture.
Moreover, decent fee income aided revenue growth. However, a lower net interest margin and decrease in loans were undermining factors.
Segment-wise, quarterly net income in Corporate & Institutional Banking and Retail banking climbed 4% and 53%, year over year, respectively. Further, the Other segment reported a 69% rise in net income, while the Asset Management Group segment registered a whopping 98% growth.
Fee Income Aids Revenues, Loans Decline, Expenses Fall
Total revenues for the reported quarter came in at $4.28 billion, up 1% year over year. The top line surpassed the Zacks Consensus Estimate of $3.97 billion.
Net interest income declined 1% from the year-ago quarter to $2.48 billion. The fall is attributable to lower yields on earning assets, partially offset by lower rates on deposits and borrowings and higher average earning assets. However, the net interest margin contracted 45 basis points to 2.39% due to lower yields on earning assets, partially muted by lower funding costs.
Non-interest income was up 3% year over year to $1.8 billion on higher asset management, corporate services, residential mortgage and other income. This was partially muted by lower income from consumer services and service charges on deposits.
PNC Financial’s non-interest expenses totaled $2.53 billion, down 4% from the year-ago figure. This decline primarily resulted from the fall in marketing and other costs, partly offset by higher personnel expenses.
Efficiency ratio was 59% compared with