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Sep 30, 2023
PNC Q3 2023 Earnings Report
PNC reported strong results driven by positive operating leverage and well-controlled expenses, with increased capital levels and tangible book value.
Key Takeaways
PNC Financial Services Group reported a net income of $1.6 billion, or $3.60 per diluted share, for the third quarter of 2023. The company generated positive operating leverage, controlled expenses, and maintained strong credit quality while increasing capital levels. However, revenue declined slightly due to lower net interest income.
Generated positive operating leverage of 3%.
Revenue declined 1% due to lower net interest income.
Expenses were well controlled, decreasing 4%.
CET1 capital ratio increased 30 basis points to 9.8%.
PNC
PNC
PNC Revenue by Segment
Revenue by Segment
Retail Banking Revenue
CapyFin.comAsset Management Revenue
CapyFin.com Forward Guidance
PNC expects the federal funds rate to remain unchanged in the near term, between 5.25% and 5.50% through mid-2024, when PNC expects federal funds rate cuts in response to the recession.
Positive Outlook
- Economic growth accelerated in the first half of 2023
- PNC’s baseline outlook is for a mild recession starting in the first half of 2024, with a small contraction in real GDP of less than 1%, lasting into the second half of 2024.
- The unemployment rate will increase through the rest of 2023 and throughout 2024, peaking at close to 5% in early 2025.
- Inflation will slow with weaker demand, moving back to the Federal Reserve's 2% objective by mid-2024.
- PNC expects the federal funds rate to remain unchanged in the near term, between 5.25% and 5.50% through mid-2024
Challenges Ahead
- Ongoing Federal Reserve monetary policy tightening to slow inflation is weighing on interest-rate sensitive industries.
- Sectors where interest rates play an outsized role, such as business investment and consumer spending on durable goods, will contract into 2024.
- PNC’s baseline outlook is for a mild recession starting in the first half of 2024
- The unemployment rate will increase through the rest of 2023 and throughout 2024
- Inflation will slow with weaker demand
Revenue & Expenses
Visualization of income flow from segment revenue to net income