PNC Financial Beats Estimates on Asset-Management Gains

PNC Financial Services Group Inc., the second-biggest U.S. regional bank, posted third-quarter profit that beat analysts’ estimates as asset-management revenue increased.

Net income rose 1 percent to $1.04 billion, or $1.79 a share, from $1.03 billion, or $1.77, a year earlier, the Pittsburgh-based lender said today in a statement. The average estimate of 25 analysts surveyed by Bloomberg was for profit of $1.70.

Chief Executive Officer Bill Demchak, 52, is relying on fees from businesses including corporate banking and asset management to help counter an industrywide slowdown in mortgage revenue. Record low interest rates are also squeezing profits.

“We added customers, grew deposits and increased fee income and capital,” Demchak said today in the statement. “We also effectively managed expenses even as we made targeted investments in our businesses and technology.”

Revenue for the quarter slid 2 percent from a year earlier to $3.84 billion, while noninterest expenses fell 1.5 percent to $2.36 billion, the bank said. That compares with analysts’ estimates of $3.79 billion and $2.36 billion, respectively. Demchak said in July he expected expenses to increase from higher costs tied to employee benefits and regulations.

Asset Management

Revenue from asset management advanced 25 percent to $411 million and corporate services fees climbed 22 percent to $374 million, the bank said. Noninterest income from residential mortgages declined 30 percent.

PNC benefited from an improvement in business lending amid a strengthening U.S. economy. Total loans increased 4.1 percent to $200.9 billion from a year earlier, while commercial lending rose 8.5 percent.

“The improved and broadening loan growth may indicate that larger corporations are finally showing some signs of willingness to expand,” Chris Mutascio, an analyst at Stifel Financial Corp.’s KBW unit, said in a research note before results were announced. “Even if it is just marginal improvement, it is improvement nonetheless.”

PNC gained 5.2 percent this year through yesterday, the third-best performance in the 24-company KBW Bank Index, which has declined 0.9 percent.

Bank of America Corp., the second-largest U.S. lender, posted a surprise third-quarter profit today of $168 million as investment-banking revenue rose. Wells Fargo, the biggest U.S. home lender, said yesterday profit rose 2.7 percent to $5.73 billion, while JPMorgan Chase & Co., the biggest U.S. bank, reported a $5.6 billion profit, compared with a year-earlier loss.

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