PNC reports profit jump, sees growth opportunities in 2025

PNC Financial
PNC's fourth-quarter profit beat analysts' estimates powered in large part by strong expense control, as cost savings exceeded the company's 2024 target.
Jamie Kelter Davis/Bloomberg

PNC Financial Services Group posted an 84% increase in fourth-quarter profit from a year ago, powered by tight expense control, a brightening credit forecast and a strong contribution from its corporate and institutional banking group.

The Pittsburgh-based bank's earnings amounted to $3.77 per share, beating analysts' consensus estimate of $3.32 according to Truist Securities. 

The $560 billion-asset PNC's full-year profit of $6 billion rose about 5% from 2023. 

"This was a solid quarter for PNC," Kyle Sanders, who covers PNC for Edward Jones, wrote in a research note Thursday. "The 2025 outlook should drive better EPS growth."

PNC reported record full-year revenue totaling $21.6 billion. It expects to beat that number by about 6% in 2025, as both spread and noninterest income are predicted to increase. "As we enter 2025, I have never been more excited about the opportunities in front of us to grow our franchise and deliver value for our stakeholders," Chairman and CEO Bill Demchak said in a press release. 

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Bill Demchak
Gettyimages/Drew Angerer

PNC spent most of 2024 in expansion mode. It announced a major branch program in February, then doubled down in November. In all, PNC plans to spend $1.5 billion over the next five years building 200 branches and renovating 1,400 existing ones. 

Even with its growth targets, PNC kept operating expenses under control in 2024. Full-year noninterest expenses totaled $13.5 billion, down about 3% from 2023. "We maintained our disciplined approach to expenses and delivered positive operating leverage," Demchak said. 

PNC reported nonperforming loans totaling $2.3 billion, or 0.73% of total loans. While nonperformers were up from the 0.68% reported at year-end 2023, they were down on a linked-quarter basis. The fourth-quarter provision for credit losses was down 76% from the same period in 2023 due to what the company described as "improved macroeconomic factors and portfolio activity."

"Credit quality was strong and the provision of $156 [million] finished well below estimates for [approximately] $300 million," Truist Securities analyst John McDonald wrote in a research note. 

PNC continued to shrink its closely watched office portfolio. Office loans totaled $6.7 billion on Dec. 31, down 16% from year-end 2023 and 7% from Sept. 30, 2024. Office chargeoffs were $62 million for the three months ended Dec. 31. That number was up 15% from the same period in 2023 but down significantly from the June 30, 2024, peak of $106 million.  

 While workers around the country are gradually returning to offices, the sector's overall outlook remains in a "wait-and-see mode," Dan Mullinger, head of PNC Real Estate, said in a press release last month. 

Mullinger, however, sounded more hopeful about the prospects for CRE as a whole. "There is a real opportunity for 2025 to be the start of a return to normal activity in the commercial real estate marketplace," he said.

PNC's CRE portfolio totaled $33.6 billion on Dec. 31., about 11% of total loans. 

PNC's fourth-quarter results were driven in large part by increased revenue from corporate and institutional banking group, up 12% from the same period in 2023 to $1.37 billion, and noninterest income, which saw 4% year-over-year growth to $2.04 billion.  "We grew customers, deepened relationships, and continued to support all of our constituents," Demchak said. 

PNC's loans totaled $316.5 billion at Dec. 31, down about 2% from year-end 2023. The company expects loan growth to be flat in 2025. Deposits of $426.7 billion were up 1.3% from Dec. 31, 2023.

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