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Mar 31, 2023
PNC Q1 2023 Earnings Report
PNC's first quarter results reflected a strong balance sheet and the power of its national franchise, with deposit growth, increased capital position, and solid financial results.
Key Takeaways
PNC Financial Services Group reported a net income of $1.7 billion, or $3.98 diluted EPS, for the first quarter of 2023. The results reflect the strength of the balance sheet and the power of the national franchise, with deposit growth, increased capital position, and solid financial results. The company controlled expenses well, achieved positive operating leverage, and maintained solid credit quality metrics.
Average deposits increased 0.3% and spot deposits grew $0.5 billion.
Average loans increased 1% and spot loans increased $0.5 billion.
The CET1 capital ratio increased to 9.2%.
Positive operating leverage of 2% was achieved.
PNC
PNC
PNC Revenue by Segment
Revenue by Segment
Retail Banking Revenue
CapyFin.comAsset Management Revenue
CapyFin.com Forward Guidance
PNC expects a recession starting in the second half of 2023, with real GDP contracting less than 1% before recovery starts in the first half of 2024 as the Federal Reserve lowers interest rates in response to a deteriorating labor market and slower inflation.
Positive Outlook
- The economy continues to expand in early 2023.
- Inflation will slow with the recession.
- Inflation will be back to the Federal Reserve’s 2% long-term objective by mid-2024.
- PNC expects the FOMC to raise the federal funds rate by 25 basis points in May.
- PNC expects a federal funds rate cut of 25 basis points in early 2024 as inflation moves toward the FOMC’s 2% long-term objective.
Challenges Ahead
- Economic growth is slowing in response to the ongoing Federal Reserve monetary policy tightening to slow inflation.
- The housing market is already in contraction, with steep drops in existing home sales and single-family housing starts, and a modest decline in house prices.
- Other sectors where interest rates play an outsized role, such as business investment and consumer spending on durable goods, will contract over 2023.
- PNC’s baseline outlook is for a recession starting in the second half of 2023.
- The unemployment rate will increase throughout 2023, peaking at above 5% in the second half of 2024.
Revenue & Expenses
Visualization of income flow from segment revenue to net income