PNC Financial Doing Enough In A 'Good Enough Is Good Enough' Environment
Stephen Simpson, CFA
Stephen Simpson, CFA
PNC Financial Running A More Cautious, Steady Long-Term Plan
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Sep. 15, 12:15 PM
- “We don’t like to just be an interest rates story," says CEO William Demchak, outlining plans to accelerate PNC's consumer business through cross-selling as Wells Fargo blows up for its abuses in that area.
- "I actually don't like our commercial-to-consumer mix because it has pressured our yields,” says Demchak, noting nearly two-thirds of his bank's loans are to commercial accounts (vs. 53% for peers). “We have the capacity to accelerate consumer loan growth simply by executing faster and better.”
- PNC will start by building its credit-card business - a $4B-$5B long-term growth opportunity, says Demchak. Among the initiatives are the offering of credit cards to college students and recent graduates. There's also a plan to expand direct auto lending.
- In addition, PNC is looking to expand its corporate banking capabilities in Dallas, Minneapolis, and Kansas City, as well as ways to monetize its 21% stake in BlackRock.
Tue, Sep. 13, 2:09 AM
- Despite the penalties imposed on Wells Fargo (NYSE:WFC), there is probably no broader problem in the U.S. banking industry over abusive sales practices, according to the head of the Consumer Financial Protection Bureau.
- Regulators fined the company a total of $185M last Thursday, while Moody's warned the episode would negatively affect the bank's debt. Wells paid another $5M to customers for creating more than 2M fake accounts.
- Related tickers: JPM, C, BAC, MS, USB, COF, FITB, TD, PNC, STI
Wed, Sep. 7, 12:56 PM
- Lifting her own EPS estimates, analyst Erika Najarian expects incremental cost savings could have the rest of the Street to boosting their numbers as well.
- This makes PNC a Buy as it can deliver earnings growth without getting a boost from higher interest rates, says Najarian, reiterating a Buy rating and lifting the price target to $100 from $90.
- PNC is higher by 0.4% today to $89.83.
Thu, Sep. 1, 4:09 AM
- Despite an increasing regulatory burden and lackluster share performance, the U.S. banking industry just logged its most profitable quarter ever, according to figures from SNL Financial and S&P Global Market Intelligence.
- Earnings for the three-month period totaled $43.6B, compared to the $43.01B in Q2 of 2015, a 1.4% beat.
- On a sequential basis, the April-to-June period topped the previous quarter by $4.56B, an 11.7% rise.
- Related tickers: JPM, C, BAC, WFC, GS, MS, USB, BK, STT, PNC, COF
Tue, Jul. 26, 9:30 AM
- Investors are underestimating the ability of certain lenders to grow earnings even if rates continue to stay super-low, says analyst Erika Najarian.
- Fitting the bill are Citizens Financial Group (NYSE:CFG), JPMorgan (NYSE:JPM), SunTrust (NYSE:STI), PNC Financial (NYSE:PNC), and Wells Fargo (NYSE:WFC).
- How might earnings grow in the absence of improved margins? Fee revenue, lower provisions, and efficiency improvements, says Najarian.
Fri, Jul. 15, 2:55 PM
- There aren't a whole lot of catalysts for bank stocks unless there's a sustained rise in the 10-year Treasury yield, says FBR's Paul Miller. "I'm going to be buying these things all day long," will be investors' attitude once yields do move higher.
- Until then, one might have a look at those with high exposure to mortgages - Wells Fargo (NYSE:WFC), U.S. Bancorp (NYSE:USB), and PNC Financial (NYSE:PNC) - as they stand to benefit from the refinancing boom. This has risks as well as refi booms inevitably burn themselves out.
- ETFs: XLF, KBE, KRE
Fri, Jul. 15, 7:47 AM
- Q2 net income of $989M or $1.82 per share vs. $1.044B and $1.88 one year ago.
- ROA of 1.11% down 8 bps Y/Y. ROE of 8.87% down from 9.75%. Tangible book value per share of $66.89 vs. $61.75.
- Net interest income of $2.068B up 1% Y/Y, with NIM of 2.70% down 3 basis points.
- Noninterest income of $1.726B down 5% Y/Y, in part thanks to Dodd-Frank valuation adjustments on nonconforming investments. Asset management revenue of $377M down 9%. Consumer services of $354M up 6%. Residential mortgage of $165M up 1%.
- Noninterest expense of $2.36B flat from a year ago.
- Nonperforming loans of $2.264B down 1% Q/Q, up 1% Y/Y. Net charge-offs of $134M down 10% Q/Q, up 100% Y/Y. Provisions of $127M vs. $152M last quarter and $46M a year ago. Energy-related provisions of $48M in Q2 vs. $80M in Q1.
- CC at 11 ET
- Previously: PNC Financial beats by $0.07, misses on revenue (July 15)
- PNC flat premarket
Fri, Jul. 15, 6:36 AM
Thu, Jul. 14, 5:30 PM
Mon, Jul. 11, 3:40 PM
- While nearly all major U.S. banks cruised through the stress tests last month, writes David Schawel, those exams are about determining if lenders have enough capital to get through a crisis, not whether they can earn the sort of risk-adjusted returns of the past.
- On this front (for insurers as well as banks), there's plenty more for investors to worry about, he says, thanks to the vanishing spread between short rates (what the companies pay on their liabilities), and long rates (what they earn on their assets).
- A new Fed study finds the adverse effect of weaker net interest margins is materially larger when rates are low. The reason: The lower bound of funding costs is zero as institutions are reticent to charge negative rates.
- Investors interested in buying banks or insurers because of seemingly cheap valuations might want to look again. Bank multiples, says Schawel, typically move alongside ROE, and serious improvement in ROE is unlikely with rates remaining low.
- Interested parties include: BAC, C, JPM, WFC, MET, PRU, LNC, PNC, USB, RF, KEY, KRE, KBE
Thu, Jul. 7, 10:36 AM
Fri, Jun. 24, 11:58 AM
- The Too Big To Fail lenders are naturally among the day's big losers following the U.K. vote to leave the EU, but losses in the financial sector are wide and deep as - among other things - interest rates look to be a lot lower for a lot longer.
- Among asset managers, Invesco (IVZ -10.8%) - with a sizable U.K. exposure - is faring about the worst. WisdomTree (WETF -7.8%) takes a hit as the yen is the solo currency surging against the dollar, reducing demand for its popular hedged Japan ETF.
- It's wait till next year (or even 2018 if you believe short-term rate futures markets) for rate hikes, meaning regional lenders can't celebrate their passing of the Fed stress tests last night. Regions (RF -7.8%), KeyCorp (KEY -6.4%), PNC Financial (PNC -5.5%), U.S. Bancorp (USB -4.2%), BB&T (BBT -5.1%).
- Even lower rates put even more pressure on the business models of the life insurers: MetLife (MET -8.8%), Prudential (PRU -7.7%), Lincoln National (LNC -9.9%), Voya (VOYA -7%). Online brokers too: E*Trade (ETFC -9.4%), Schwab (SCHW -9.5%).
- ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, KRU, KRS, WDRW, DPST
Thu, Jun. 23, 4:51 PM
- Ally Financial (NYSE:ALLY): Actual end of 2015 CET1 ratio of 9.2%, Q1 2018 CET1 ratio under severely adverse scenario of 6.1%, minimum 6.1%.
- American Express (NYSE:AXP): Actual 12.4%, Q1 2018 12.3%, minimum 11.4%.
- Bank of America (NYSE:BAC): Actual 11.6%, Q1 2018 8.1%, minimum 8.1%.
- BNY Mellon (NYSE:BK): Actual 11.5%, Q1 2018 11.2%; minimum 10.5%.
- BB&T (NYSE:BBT): 10.3%, 6.9%, 6.9%
- BBVA Compass (NYSE:BBVA): 10.7%, 6.5%, 6.5%.
- BMO Financial (NYSE:BMO): 11.9%, 5.9%, 5.9%.
- Capital One (NYSE:COF): 11.1%, 8.2%, 8.2%.
- Citigroup (NYSE:C): 15.3%, 9.2%, 9.2%.
- Citizens Financial (NYSE:CFG): 11.7%, 8.8%, 8.8%.
- Comerica (NYSE:CMA): 10.5%, 8.3%, 8.3%.
- Discover (NYSE:DFS): 13.9%, 12.4%, 11.9%.
- Fifth Third (NASDAQ:FITB): 9.8%, 6.8%, 6.8%.
- Goldman Sachs (NYSE:GS): 13.6%, 10.2%, 8.4%.
- HSBC N.A. (NYSE:HSBC): 15.7%, 9.1%, 9.1%.
- Huntington Bancshares (NASDAQ:HBAN): 9.8%, 5%, 5%.
- JPMorgan (NYSE:JPM): 12%, 8.3%, 8.3%.
- KeyCorp (NYSE:KEY): 10.9%, 6.4%, 6.4%.
- M&T (NYSE:MTB): 11.1%, 6.9%, 6.9%.
- Morgan Stanley (NYSE:MS): 16.4%, 10%, 9.1%.
- Northern Trust (NASDAQ:NTRS): 10.8%, 9.6%, 9.6%.
- PNC Financial (NYSE:PNC): 10.6%, 7.6%, 7.6%.
- Regions (NYSE:RF): 10.9%, 7.3%, 7.3%.
- Santander Holdings (NYSE:SAN): 12%, 11.8%, 11.8%
- State Street (NYSE:STT): 13%, 9.6%, 9.6%
- SunTrust (NYSE:STI): 10%, 7.5%, 7.5%.
- TD Group (NYSE:TD): 13.1%, 8.4%, 8.4%.
- U.S. Bancorp (NYSE:USB): 9.6%, 7.5%, 7.5%.
- Wells Fargo (NYSE:WFC): 11.1%, 7.2%, 7.2%.
- Zions (NASDAQ:ZION): 12.2%, 6.6%, 6.6%.
- Previously: All 33 banks pass this year's stress tests (June 23)
Tue, Jun. 14, 3:48 PM
- The S&P 500 is down just 0.25%, but the financial sector (XLF -1.5%) is taking a far larger beating as the idea of higher interest rates fades, with German 10-year yields falling below zero, and the U.S. 10-year Treasury yield within sight of its all-time low. KBE -2.3%, KRE -2.3%
- The FOMC concludes its two-day policy meeting tomorrow, at which updated economic projections and dots will be unveiled, along with a Janet Yellen press conference.
- How much of the panic into fixed-income is due to concern about the U.K. exiting the EU will become evident next Thursday night as that country's Brexit votes are tallied.
- Bank of America (BAC -2.5%), Citigroup (C -3.1%), Wells Fargo (WFC -2.5%), Regions Financial (RF -2.9%), KeyCorp (KEY -3.7%), PNC Financial (PNC -2.4%), Fifth Third (FITB -2.6%), SunTrust (STI -2.8%), E*Trade (ETFC -2.6%), MetLife (MET -1.6%), Prudential (PRU -1.8%), BNY Mellon (BK -2%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Mon, Jun. 13, 12:30 PM| Mon, Jun. 13, 12:30 PM | 1 Comment
Thu, May 26, 3:15 PM
- All banks in the team's coverage universe have plenty of room for capital return, says analyst John McDonald, expecting some to have sufficient cushions to be able to move payout ratios (dividends and buybacks) to close to 100% of earnings.
- Those most likely to have solid increases in payouts are Bank of America (NYSE:BAC), BB&T (NYSE:BBT), PNC FInancial (NYSE:PNC), and Citigroup (NYSE:C). Those with the least cushion are U.S. Bancorp (NYSE:USB), JPMorgan (NYSE:JPM), and Regions Financial (NYSE:RF).