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Sep 30, 2022
PNC Q3 2022 Earnings Report
PNC reported a strong third quarter with increased revenue, net interest margin, and positive operating leverage.
Key Takeaways
PNC Financial Services Group reported a net income of $1.6 billion, or $3.78 diluted EPS, for Q3 2022. The results reflect continued strong momentum across the expanded PNC footprint with loan and revenue growth, net interest margin increase, and well-controlled expenses, resulting in substantial positive operating leverage.
Operating leverage of 7%, reflecting revenue growth of 8% and expense growth of 1%.
Net interest income grew 14%, with NIM increasing 32 basis points.
Average loans grew 3%, driven by commercial and consumer loan growth.
PNC returned $1.7 billion of capital to shareholders.
PNC
PNC
PNC Revenue by Segment
Revenue by Segment
Retail Banking Revenue
CapyFin.comCorporate & Institutional Revenue
CapyFin.comAsset Management Revenue
CapyFin.com Forward Guidance
PNC expects further increases in the federal funds rate through the rest of this year, to a range of 4.25% to 4.50% at the end of 2022. The federal funds rate is expected to peak between 4.50% and 4.75% in early 2023, before falling in early 2024 as inflation ebbs and economic growth slows.
Positive Outlook
- Strong labor market with average monthly job growth well above the pre-pandemic pace.
- Unemployment rate at a 50-year low.
- Supply-chain difficulties will continue to ease into 2023.
- Strong wage growth and the recent decline in energy prices will support consumer spending.
- Economic growth is expected to be below its long-term trend in the near term as the Federal Reserve continues to tighten monetary policy in an attempt to reduce inflationary pressures, but does not expect a near-term recession.
Challenges Ahead
- Labor shortages will remain a constraint into 2023.
- Recession risks over the next few years are elevated because of tighter monetary policy.
- Inflation has started to slow, but remains near the strongest pace in decades.
- Inflation should slow further due to softer economic growth and a continued easing in supply-chain difficulties and will return to the Federal Reserve’s 2% long-run objective in 2024.
Revenue & Expenses
Visualization of income flow from segment revenue to net income