Oct 13 (Reuters) – PNC Financial Services Group
said on Friday it would reduce its workforce by about 4% as
part of its cost reduction plans after it posted a drop in
profit in the third quarter.
The lender said the job cuts would reduce its personnel
expenses by about $325 mln, or 5%, annually.
Shares of the regional bank were up 0.5%, to $121.95, in
premarket trade.
For the three months ended Sept. 30, PNC reported a decline
in third-quarter revenue of 5.7%, to $5.23 billion, missing the
street estimate of $5.32 billion.
Average deposits at Pittsburgh-based PNC were also down
3.8%, at $422.5 billion in the third quarter, compared to $439.2
billion for the same quarter last year.
The lender earned a profit of $1.57 billion, or $3.60 per
share, compared to $1.64 billion, or $3.78 per share, from a
year earlier. Analysts had estimated a profit of $3.11 per
share, according to LSEG IBES data.
PNC set aside $129 million as provisions for credit losses,
compared to $241 million a year earlier.
The Federal Reserve’s quantitative tightening, while
boosting net interest income (NII) – the difference between what
banks earn from lending and pay out on deposits – has also
increased the odds of loan defaults. Banks have responded by
allocating more capital to their rainy-day funds.
Some lenders have been cautioning about a weakness in NII
growth as borrowing costs surge, dissuading customers from
applying for loans, especially as the central bank keeps rates
higher for longer.
The lender said it expects a drop of 1% to 2% for the fourth
quarter in its net interest income (NII), compared to the
current quarter this year. In the third quarter, it posted a
drop of 1.6% in NII, to $3.4 billion, from the same quarter last
year.
PNC’s banking division said earlier this month that it had
purchased a portfolio of capital commitments from Signature
Bridge Bank for $16.6 billion in an arrangement with the Federal
Deposit Insurance Corp as receiver.
(Reporting by Jaiveer Shekhawat and Pritam Biswas in Bengaluru;
Editing by Pooja Desai)
Source: marketscreener.com
