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PNC Financial first-quarter profit meets estimates

Reuters

April 12 () - PNC Financial Services on Friday said it expects second-quarter net interest income and fee revenue to be higher than first quarter, sending its shares up 2.3 percent in morning trading.

Second-quarter interest income is expected to rise in low-single digits, and fee income in mid-single digits, the bank said on a post-earnings conference call with analysts.

Earlier on Friday, the U.S. lender - one of the largest by assets - just about met first quarter profit estimates, as provisions for bad loans and a rise in expenses overshadowed growth in loans and higher interest income.

During the quarter, the bank set aside $189 million to cover for bad loans, more than double from a year ago.

The loan loss provision was higher than anticipated largely due to growth in loans, said chief executive officer Bill Demchak.

The bank's loan portfolio grew about 5 percent to $232 billion, while net interest income rose about 5 percent to $2.48 billion, helped by higher interest rates.

Lending at peer Wells Fargo , which reported its quarterly results on Friday, rose marginally, boosted by growth in commercial loans.

Pittsburgh, Pennsylvania-based PNC Financial reported a 2 percent rise in expenses, mainly due to higher spending on its online banking business as it battles online lenders, asset managers and insurers, besides the big banks, for a piece of the lending business.

Lately, U.S. banks have been reaping the benefits of interest rate hikes by the Federal Reserve, which raised rates four times since the first quarter last year.

However, interest rates will be little help for banks going forward. In March, the Fed held interest rates steady and abandoned projections for further rate hikes this year to counteract an expected slowdown in the economy.


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Reuters

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