The earnings report PNC posted Thursday paints two varying pictures depending on the comparison point. Looking year over year, profit at the Pittsburgh-based lender dropped 21.7% in 2022’s first quarter — to $1.43 billion, from $1.83 billion. However, net income rose 9.4% over the previous quarter — partly because first-quarter integration costs from the bank’s acquisition of BBVA USA dipped to 7% of what they were in October through December.
PNC’s revenue, meanwhile, jumped 11.2% year over year to $4.69 billion. But that same figure represented an 8.5% drop from the $5.13 billion the bank reported three months ago.
Noninterest expenses have seen a 23.2% year-over-year uptick. But the $3.17 billion the bank posted Thursday marks a 16.3% drop from $3.79 billion at the end of December.
A few more quarters will surely reconcile the difference between what PNC was before the BBVA deal and what it is becoming. Complicating the picture, no doubt, is a sharp incline in inflation and the recent bump in interest rates. The bank benefits in optics, at least in regard to its year-over-year trajectory, through the addition of BBVA’s U.S. footprint in the face of such economic hurdles.
The bank recaptured $208 million in loan-loss provisions it had begun to build up during the COVID-19 pandemic’s early days. This, in itself, may demonstrate a difference in outlook between regional banks and global ones. JPMorgan Chase, for example, reported Wednesday it added hundreds of millions of dollars to its credit reserves — some as an inflation safeguard and some to protect against Russia exposure, a prospect regional banks generally see little of.
In a statement Thursday, PNC CEO Bill Demchak spotlighted the bank’s decline in expenses, continued credit quality and performance on loans and deposits. In particular, an uptick in deposits on the retail side did much to offset a dip in commercial banking deposits.
"In addition to normal seasonality, fee income was adversely impacted by a general slowdown in capital markets activity," he said. "Nevertheless, our financial results were solid."
The dual picture of PNC’s results continues in a look into particular segments of the business: Net interest income at the lender’s retail banking unit has seen a 6.3% drop from last quarter but a 12.4% increase year over year. At the corporate and institutional bank, net interest income slumped 5.5% over the previous quarter but has surged 15.9% year over year.