On Jun 5, 2013, we reiterated our long-term recommendation on
The PNC Financial Services Group, Inc.
) at Neutral based on its diverse revenue mix, strong capital
base and expense reduction initiatives. However, stringent
regulations as well as pressures on the banking sector might act
as deterrents to the company's fundamentals.
PNC Financial reported first-quarter 2013 earnings of $1.76 per
share, which surpassed the prior-year quarter figure of $1.44 and
easily beat the Zacks Consensus Estimate of $1.57.
Better-than-expected results reflected an improved top line.
Moreover, lower nonperforming assets and operating expenses as
well as healthy capital level were the positives. However, an
increase in provision for credit losses and net charge-offs were
matters of concern.
PNC Financial has been focused on strategic acquisitions since
2008, to generate revenue growth. The acquisitions of National
City and the retail banking franchise of Flagstar Bank, the
purchase of branches from a subsidiary of BankAtlantic Bancorp
Inc and the addition of the RBC Bank (USA) bear testimony to the
Further, the company's focus on expense control has enabled it to
offset continued investments in distribution channels. Moreover,
PNC Financial's strong balance sheet position and its
shareholder-friendly approach - consistent dividend payment even
during the financial crisis and consecutive dividend increases
over the past 4 years - boost investors' confidence in the stock.
However, low short-term interest rates along with persistent
narrow spreads at the short end of the yield curve continue to
adversely impact both net interest income and net interest margin
of PNC Financial. Though the U.S. economy posted stable to
improving economic data during the quarter, continued political
uncertainty remains plausible concerns.
For PNC Financial, the Zacks Consensus Estimate for 2013 and 2014
remained stable at $6.69 and $6.89 per share, over the last 30
days. The company currently carries a Zacks Rank #2 (Buy).
Other Major Banks to Consider
Some other banks that are performing well include
JPMorgan Chase & Co.
Fifth Third Bancorp
), all of which carry the same Zacks rank as PNC Financial.
CITIGROUP INC (C): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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