PNC Financial Services Group Inc., the second-largest U.S. regional bank, reported a 24 percent increase in first-quarter profit, beating analysts’ estimates, as the lender cut costs and revenue climbed 6 percent.
Net income rose to $1 billion, or $1.76 a share, from $811 million, or $1.44, a year earlier, the Pittsburgh-based lender said in a statement. The average estimate of 31 analysts surveyed by Bloomberg was for earnings of $1.56 a share.
Chief Executive Officer Jim Rohr, 64, has targeted $700 million in cost reductions for this year, and CEO-elect Bill Demchak, who takes over for Rohr next week, has said he’ll close branches and cut staff. PNC consolidated 30 branches and said it plans to shut 200 in 2013. The bank had 56,172 employees at the end of March, 433 fewer than a year earlier.
“PNC’s diversified businesses delivered solid revenue despite weaker lending in the first quarter and, combined with significantly reduced expenses, drove improved returns for our shareholders,” Rohr said in the statement.
The lender cut non-interest expenses by 2.4 percent to $2.4 billion in the first quarter from a year earlier. Interest expenses also declined, falling 27 percent to $222 million. PNC said it expects to reduce full-year non-interest expenses from 2012.
Total revenue rose 6 percent to $3.96 billion, missing the $3.98 billion average estimate of 17 analysts surveyed by Bloomberg.
PNC said non-interest expenses may climb 2 percent to 3 percent in the second quarter from the first three months of this year, according to a slide presentation posted. Net interest income could decline 2 percent to 3 percent, PNC said.
The bank set aside $236 million for soured loans in the quarter, a 28 percent increase from the year-earlier period. That provision may be $200 million to $300 million in the second quarter, according to the presentation.
PNC said this month it would boost its quarterly dividend 10 percent to 44 cents, citing improved capital levels and its financial results.
U.S. Bancorp, the nation’s largest regional lender, said first-quarter earnings rose 6.7 percent as the company set aside less for soured loans. Revenue, which declined 1.1 percent to $4.87 billion, missed the $5.03 billion average estimate of 18 analysts surveyed by Bloomberg.
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