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Dec 31, 2022
PNC Q4 2022 Earnings Report
PNC reported strong results driven by loan growth and record revenue in a rising rate environment while controlling expenses and maintaining solid credit quality.
Key Takeaways
PNC Financial Services Group reported a net income of $1.5 billion, or $3.47 diluted EPS, for the fourth quarter of 2022. The results reflect a 3% average loan growth, a 4% revenue increase, and a 10 basis point NIM expansion. The company capitalized on opportunities across its coast to coast franchise and delivered substantial positive operating leverage.
Net interest income grew 6% and NIM increased 10 basis points.
Noninterest income increased $5 million and fee income grew 4%.
Average loans grew 3%, driven by commercial and consumer loan growth.
PNC returned $1.2 billion of capital to shareholders.
PNC
PNC
PNC Revenue by Segment
Revenue by Segment
Retail Banking Revenue
CapyFin.comAsset Management Revenue
CapyFin.com Forward Guidance
PNC anticipates a recession starting in the spring of 2023, with a modest contraction in real GDP before recovery begins in early 2024. The unemployment rate is expected to increase throughout 2023, peaking above 5% in the first half of 2024. Inflation is projected to slow with the recession, returning to the Federal Reserve's 2% long-term objective by early 2024.
Positive Outlook
- The economy is expected to continue expanding in early 2023.
- Inflation will slow with the recession.
- The Federal Reserve is expected to lower interest rates in response to a deteriorating labor market and slower inflation.
- PNC expects the FOMC to increase the federal funds rate by an additional 50 basis points by mid-March.
- PNC expects a federal funds rate cut of 25 basis points in December 2023.
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 steep decline as much higher mortgage rates have led to significant drops in housing starts, home sales, and house prices.
- Other sectors where interest rates play an outsized role, such as business investment and consumer spending on durable goods, will contract in 2023.
- PNC's baseline outlook is for a recession starting in the spring of 2023, with real GDP contracting a modest 1%.
- The unemployment rate will increase throughout 2023, peaking at above 5% in the first half of 2024.
Revenue & Expenses
Visualization of income flow from segment revenue to net income