PNC's profits swell as the financial services giant lowers loan loss provision

PNC Financial Services Group posted profits of $1.46 billion in the third quarter, up 11% from $1.32 billion a year earlier, as the Pittsburgh region’s biggest bank saw revenue edge up 1% to $4.28 billion.

The Pittsburgh-based bank benefited from a lower provision for loan losses after setting aside a massive $2.5 billion in the second quarter as it braced for the possibility of an extended economic downturn.

By comparison, PNC’s provision for credit losses in the third quarter was $52 million, down from $183 million in the same quarter last year.

“PNC delivered solid third-quarter results against a backdrop of a continuing uncertain economy,” chairman and CEO Bill Demchak said in a statement early Wednesday. “We have substantial capital and liquidity flexibility, and remain well positioned to take advantage of potential investment opportunities to enhance shareholder value.”

Patricia Sabatini

PNC’s reserves against bad loans skyrocket amid uncertain economy

The financial services giant is flush with cash after selling its 22% stake in money manager Blackrock Inc., netting $14.2 billion in the second quarter. Mr. Demchak has said that PNC is looking to make a major acquisition with the money, but only if the price is right.

Revenue in the third quarter of $4.28 billion compared with $4.08 billion in the second quarter and $4.24 billion in the third quarter of 2019. Per-share profits rose 15% to $3.39 from $2.94 a year earlier.

On the downside, net interest income — essentially profits on loans — fell because of low interest rates and weak loan demand, Mr. Demchak told analysts in a conference call Wednesday.

Non-performing loans also continued to rise, especially in segments hit hard by the pandemic, he said, such as hotels, restaurants and shopping centers.

“If you think about retail, nobody’s paying rent, so malls are getting killed, and they were already on the decline,” Mr. Demchak said.

Patricia Sabatini: PSabatini@post-gazette.com; 412-263-3066.

Updated at 12:14 p.m. on Oct. 14, 2020

First Published October 14, 2020, 8:24am