PNC beats analysts’ forecasts; CEO forecasts ’20 challenges

Pittsburgh-based PNC Financial Services Group reported strong results for the fourth quarter and full year on Wednesday as both fee income and profit on loans rose.

“Overall, it was an excellent year for PNC capped off by another solid quarter,” Chairman and CEO Bill Demchak told analysts in a conference call.

He said expenses were “well controlled” and he set a goal of reducing costs another $300 million in 2020 on top of the $300 million in savings achieved in 2019. The money will be used for supporting PNC’s businesses, including continued investments in technology.

Mr. Demchak said Pittsburgh’s dominant bank faces uncertainty in the coming year because of international trade disputes, geopolitical tensions and the presidential election.

“But we’re excited about the momentum with which we entered the year,” he said.

PNC expects interest rates to remain relatively stable this year. The forecast comes on the heels of three rate cuts by the Federal Reserve in 2019, which tend to squeeze banking industry profits.

The bank also said it received approval from the Fed to buy back up to an additional $1 billion in common shares through the end of the second quarter.

For the fourth quarter, PNC reported profits of $1.3 billion, or $2.97 per share, up 2% from $1.27 billion, or $2.75, a year earlier.

Revenue rose 6% to $4.61 billion from $4.34 billion.

The results beat analysts’ consensus estimate for profits of $2.93 per share and revenue of $4.48 billion.

For all of 2019, earnings rose 1% to $5.1 billion, or $11.39 a share, from $5 billion, or $10.71.

Revenue hit a record $17.83 billion, up 4% from $17.13 billion in 2018.