The PNC Financial Services Group, Inc. (PNC) 2024 Q2 Earnings Call Summary
July 16, 2024 
The PNC Financial Services Group, Inc. (PNC)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
Strong Second Quarter Performance: PNC reported a strong second quarter with $1.5 billion in net income or $3.39 diluted earnings per share, including a gain on Visa Class B shares.
Net Interest Income Growth: Net interest income (NII) and net interest margin (NIM) both grew in the quarter, with expectations of reaching record NII in 2025.
Customer Growth and New Product Launch: PNC continues to add new customers and launched a competitive new credit card, PNC Cash Unlimited, with plans for more launches.
Expense Control and Operating Leverage: Expenses remained well controlled, generating positive operating leverage. The continuous improvement program target for 2024 was increased.
Capital Strength and Dividend Increase: PNC further strengthened its capital levels and the board approved an increase in the quarterly stock dividend.
Pessimistic Highlights
Increase in Charge-offs Within CRE Office Portfolio: There was an increase in charge-offs within the commercial real estate (CRE) office portfolio, although PNC remains adequately reserved.
Economic Uncertainty: The direction of near-term economy remains uncertain, affecting commercial loan growth expectations.
Company Outlook
Economic Growth Expectation: PNC expects continued economic growth in the second half of the year with real GDP growth of approximately 2% in 2024.
Interest Rate Cuts Forecast: Anticipates the Federal Reserve to cut rates twice in 2024.
Loan Growth and Revenue Guidance: Average loans expected to be stable with a slight increase in net interest income and fee income for the third quarter of 2024. Full-year guidance includes nominal loan growth and a slight decrease in total revenue.
Q & A Highlights
Q: On NII and securities restructuring. (Betsy Graseck, Morgan Stanley)
A: The securities restructuring is considered a one-off, with no plans for further restructuring. NII growth does not depend on additional restructuring. (William Demchak)
Q: Regarding deposit pricing and levels. (Betsy Graseck, Morgan Stanley)
A: Expect deposits to be stable to down, with a focus on stability. Deposit rates are expected to drift up slightly. (William Demchak)
Q: On NII outlook and underlying run rate. (John Pancari, Evercore ISI)
A: The guide for NII would still be higher even without the restructuring, despite muted loan growth assumptions. (William Demchak, Robert Reilly)
Q: About the pace of buybacks considering CET1 and AOCI benefits. (John Pancari, Evercore ISI)
A: Pace of buybacks expected to continue as is, with future decisions influenced by loan growth and capital generation. (Robert Reilly)
Q: On deposit rate trends and impact of FedNow Instant Payment Services. (Erika Najarian, UBS; Bill Carcache, Wolfe Research)
A: Deposit rates expected to drift up slightly. FedNow is not expected to have a significant impact on PNC. (Robert Reilly, William Demchak)