PNC Financial quarterly profit drops on lower interest income, higher provisions

(Reuters) – PNC Financial (NYSE:PNC) reported a 4% drop in third-quarter net profit on Tuesday, as it earned less from customer interest payment and set aside a bigger buffer of capital to cover loans that may not be repaid in an uncertain economy.

PNC said net interest income (NII), or the difference between what a bank earns as interest on loans and pays out on deposits, declined to $3.41 billion in the third quarter from $3.42 billion a year earlier.

Interest income, a measure of lending profitability, is expected to decline across the sector this year, as the Federal Reserve continues to cut benchmark rates.

“We remain well positioned to capitalize on opportunities and achieve record NII in 2025,” PNC Chairman and Chief Executive Officer Bill Demchak said in a statement.

The banking industry has been preparing for a potential fallout from the higher-for-longer interest rate environment by increasing its loan loss provisions, anticipating that some borrowers may struggle to repay credit card, mortgage and other debt.

PNC’s provisions for credit losses rose to $243 million in the third quarter, compared with $129 million a year earlier.

Its net income fell to $1.51 billion, or $3.49 per share, in the three months ended Sept. 30 from $1.57 billion, or $3.60 per share, a year ago.

The bank’s shares, up nearly 22% in 2024, were trading 1% higher before the bell.