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PNC FINANCIAL SERVICES GROUP, INC. (PNC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS of $3.51 beat consensus ($3.39*), while total revenue of $5.45B was modestly below consensus ($5.48B*); NIM expanded 3 bps to 2.78% and efficiency improved to 62% .
  • Spot C&I loans grew 3% QoQ, driving 1% spot loan growth; credit quality remained solid with NCOs at 0.26% and ACL/loans at 1.64% .
  • Management reaffirmed full-year 2025 guidance (record NII +6–7%, total revenue ~+6%, expenses ~+1%, ETR ~19%) and guided Q2: loans +~1%, NII +1–2%, fees +1–3%, other noninterest $150–$200mm, NCOs ~$300mm .
  • Capital return continued ($0.8B in Q1) with CET1 at 10.6% and TBV/share up 5% QoQ to $100.40; management indicated buybacks likely to increase near term given share price .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 2.78% (+3 bps QoQ) as funding costs fell and fixed-rate assets repriced; management reiterated confidence in record NII for 2025 and approaching ~2.90% NIM by Q4 (“we still feel that we can approach 3%”) .
  • Commercial momentum: spot C&I +3% QoQ from higher utilization and new production; utilization ended at 50.3% (+80 bps vs YE) .
  • Capital and TBV: CET1 10.6%, AOCI improved by $1.3B, TBV/share +5% to $100.40; $0.8B capital returned (dividends + buybacks) .
  • Quote: “We grew customers and commercial loans, expanded our net interest margin, increased capital levels and maintained solid credit quality metrics… expect record net interest income and solid positive operating leverage in 2025.” – CEO Bill Demchak .

What Went Wrong

  • Fee income -2% QoQ on seasonality and softer capital markets/trading; capital markets and advisory down 12% QoQ .
  • Other noninterest income fell $38mm and included a negative $40mm Visa derivative adjustment related to litigation escrow funding .
  • Provision rose to $219mm with higher downside scenario weighting (tariff risk); management guided Q2 NCOs to ~$300mm given lumpy CRE office resolutions .

Financial Results

Summary vs Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*Commentary
Revenue ($USD Billions)$5.432 $5.567 $5.452 $5.482*Slight revenue miss vs consensus; seasonality and softer capital markets offset NIM expansion .
Diluted EPS ($)$3.49 $3.77 $3.51 $3.39*EPS beat vs consensus on well-controlled expenses and NIM expansion.
Net Interest Margin (%)2.64 2.75 2.78 —Third consecutive QoQ expansion.
Efficiency Ratio (%)61 63 62 —YoY improvement from 65% in Q1 2024 .
Return on Avg Assets (%)1.05 1.14 1.09 —Stable strong returns.
CET1 Ratio (%)10.3 10.5 10.6 —Continued capital build.

Values retrieved from S&P Global (*).

Income Statement Highlights

Metric ($USD Millions)Q3 2024Q4 2024Q1 2025
Net Interest Income3,410 3,523 3,476
Noninterest Income2,022 2,044 1,976
Total Revenue5,432 5,567 5,452
Noninterest Expense3,327 3,506 3,387
Provision for Credit Losses243 156 219
Net Income1,505 1,627 1,499

Balance Sheet and Credit KPIs

KPIQ3 2024Q4 2024Q1 2025
Average Loans ($B)319.6 319.1 316.6
Spot Loans ($B)321.4 316.5 318.9
Average Deposits ($B)422.1 425.3 420.6
NCOs ($mm)286 250 205
NCOs / Avg Loans (annualized)0.36% 0.31% 0.26%
ACL / Loans (%)1.65% 1.64% 1.64%
Nonperforming Loans ($mm)2,578 2,326 2,292
TBV/Share ($)96.98 95.33 100.40
AOCI ($B)(5.1) (6.6) (5.2)

Segment Breakdown (Net Income)

Segment ($mm)Q3 2024Q4 2024Q1 2025
Retail Banking1,164 1,074 1,112
Corporate & Institutional Banking1,197 1,365 1,244
Asset Management Group104 103 113
Other(975) (932) (988)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income (YoY)FY 2025Up 6–7% (unchanged) Up 6–7% Maintained
Noninterest Income (YoY)FY 2025~+5% (unchanged) ~+5% Maintained
Total Revenue (YoY)FY 2025~+6% (unchanged) ~+6% Maintained
Noninterest Expense (YoY)FY 2025~+1% (unchanged) ~+1% Maintained
Effective Tax RateFY 2025~19% (unchanged) ~19% Maintained
Avg LoansFY 2025Stable; spot +2–3% (unchanged) Stable; spot +2–3% Maintained
NIM TrajectoryFY 2025 exitApproach ~2.90% by Q4 (informal) Approach ~2.90% Maintained
Avg Loans QoQQ2 2025N/A~+1% New
NII QoQQ2 2025N/A+1–2% New
Fee Income QoQQ2 2025N/A+1–3% New
Other Noninterest IncomeQ2 2025N/A$150–$200mm New
Total Revenue QoQQ2 2025N/A+1–3% New
Noninterest Expense QoQQ2 2025N/AStable New
Net Charge-offsQ2 2025N/A~$300mm New
DividendsQ2 2025$1.60/quarter $1.60/quarter Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
NIM/NII trajectoryNIM 2.64%; record NII targeted in 2025 NIM 2.75%; NII +3% QoQ NIM 2.78%; record NII reaffirmed; exit ~2.90% NIM Improving NIM; NII confidence rising
Capital markets feesStrong in Q3 (M&A, underwriting) Mixed; residential mortgage down Softer QoQ; pipelines strong at Harris Williams (+~20% YoY) Near-term soft; medium-term constructive
Loan utilization/C&IStable balances Stable avg loans Spot C&I +3%; utilization +80 bps to 50.3% Early-cycle recovery
Credit: CRE officeElevated NCOs; CRE pressures NCOs down QoQ NCOs 26 bps; Q2 NCOs lumpy (~$300mm) Normalizing; lumpy resolutions ahead
Deposit pricing/betasIB deposits 77%; NIB 23% IB 77%; NIB 23% NIB 22%; rate paid down 20 bps; beta 51% Gradual funding cost relief
Macro/tariffsExpect cuts in 2025 Cuts in H1’25; inflation elevated with tariffs Tariff uncertainty could pressure fees; reserves include downside weighting Increased macro risk
Capital returnCET1 building; buybacks ongoing $0.9B returned; CET1 10.5% $0.8B returned; CET1 10.6%; buybacks likely to step up Accretive capital deployment
Leadership—President departure (Lyons) New President Mark Wiedman; strategy unchanged Management depth

Management Commentary

  • Strategic focus: “We will perform well in periods of uncertainty… strength of our balance sheet… diversified business mix, leading technology and our people” – CEO Bill Demchak .
  • Loan growth dynamics: “C&I loans were $181B… largest increase since Q4 2022… driven by higher utilization rates and new loan production” – CFO Rob Reilly .
  • Rate positioning: “We’ve reduced our interest rate sensitivity and further locked in a portion of our fixed rate asset repricing” via forward-starting swaps ($20B; +$9B in Q1) – CFO .
  • NIM outlook: “We still feel that we can approach 3%. So I think the 2.90% range is reasonable in the fourth quarter.” – CFO .
  • Capital return: “We’d like to buy more shares… do more [buybacks]… nothing that breaks the current path” – CEO/CFO .

Q&A Highlights

  • Loan utilization: Growth broad-based across categories; utilization increased steadily; limited evidence of pre-tariff inventory builds driving draws .
  • Capital markets pipeline: Harris Williams M&A pipeline ~20% higher YoY; near-term softness in FX and client trading activity .
  • Reserves and macro: Reserves incorporate downside tariff scenarios; base unemployment assumption at ~5% .
  • NIM path: Informal exit target ~2.90% in Q4 2025; balance sheet actions (swaps) locking in outer-year NII .
  • Q2 credit: NCOs expected ~$300mm due to lumpy CRE office resolutions; reserves adequate .
  • Deposits: NIB ~22%; rate paid expected to trend lower gradually through year .
  • Succession/leadership: CEO affirmed long-term commitment; new President to run businesses; strategy unchanged .

Estimates Context

  • EPS beat: Q1 2025 EPS of $3.51 vs consensus $3.39* (Primary EPS - # of estimates: 14*).
  • Revenue slight miss: Q1 2025 revenue $5.452B vs consensus $5.482B* (Revenue - # of estimates: 12*).
    Values retrieved from S&P Global (*).

Key Takeaways for Investors

  • NIM expansion and swap positioning support visibility to record NII in 2025; informal target of ~2.90% NIM by Q4 is a positive tailwind .
  • Loan growth momentum reemerging via C&I utilization and commitments; watch whether tariff uncertainty dampens fee-sensitive businesses .
  • Credit normalization continues, but CRE office resolutions drive lumpiness; Q2 NCO guide (~$300mm) is manageable within current reserves .
  • Capital strength (CET1 10.6%) and AOCI improvement underpin buyback capacity; messaging suggests incremental repurchase intensity near term .
  • Expense discipline (FY +~1%) enables positive operating leverage even with fee volatility; continuous improvement program targets $350mm in 2025 .
  • Deposit pricing relief (rate paid -20 bps QoQ) and stable NIB % support funding mix improvements into H2’25 .
  • Near-term trading: EPS beat, capital return, and NIM trajectory are supportive; watch headlines on tariffs and capital markets activity as potential volatility catalysts .

Appendix: Additional Data Points

  • Dividend: $1.60 per common share declared (paid May 5, 2025) .
  • Segment trends: Retail earnings +4% QoQ on lower expenses; C&IB earnings -9% QoQ on softer fees; AM Group earnings +10% QoQ on higher NII .
  • Visa derivative impact: Negative $40mm in Q1 (vs -$23mm in Q4) .
  • Liquidity: LCR averaged 108% in Q1; average FRB cash balances $34.2B .

Citations: All figures and statements are sourced from company press releases, 8-K filings, financial supplements, and Q1 2025 earnings call transcript: . Values retrieved from S&P Global (*) for consensus estimates.