PNC - PNC Financial: The 4.1% Yield Is Solid But There Are Risks (Rating Upgrade)

2024-04-23 08:00:00 ET

Summary

• PNC Financial reported a mixed first-quarter earning sheet, with an EPS beat but a top-line miss due to falling net interest income.
• The bank's net interest income declined significantly year over year, precipitating a double-digit drop in net income.
• PNC Financial, however, is growing its dividend and has a low payout ratio.

The PNC Financial Services Group, Inc. ( PNC ) reported a mixed first-quarter earnings sheet last week that included an EPS beat but also a top-line miss due to falling net interest income. The lender is suffering from weaker loan levels and higher deposit costs, which led to a double-digit decline in its net interest income year over year. The firm also has some risks in its commercial real estate portfolio, but the bank remained profitable in the first-quarter overall. With shares recently dipping again after the inflation report for March, which is set to lead to a higher for longer rate environment. This in turn allow PNC Financial to charge higher rates for its loans, which improved the risk profile, in my opinion!...

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