The PNC Financial Services Group, Inc. (PNC - Analyst Report) reported another impressive quarter with an earnings surprise of 5.7%. The company’s fourth-quarter 2014 earnings per share of $1.84 outpaced the Zacks Consensus Estimate of $1.74. Moreover, the bottom line compared favorably with $1.69 earned in the prior-year quarter.
For full year 2014, the company reported earnings per share of $7.30, which surpassed the Zacks Consensus Estimate of $7.20. However, this compared unfavorably with $7.36 earned in the prior year.
Better-than-expected results were primarily driven by a fall in the provision for credit losses and rise in non-interest income, which were, however, partially offset by higher expenses and lower net interest income. Further, an enhanced credit quality acted as a positive during the quarter.
The company reported net income of $1.06 billion in the reported quarter, down 1.6% from the year-ago quarter.
Furthermore, segment-wise, on a year-over-year basis, quarterly net income in Retail Banking, Asset Management Group and Other, including BlackRock segments, rose 60.7%, 25% and 10.6%, respectively. On the other hand, Corporate & Institutional Banking and Non-Strategic Assets Portfolio segments declined 0.9% and 35.7% respectively. Residential Mortgage Banking segment’s net income fell substantially from $55 million in fourth-quarter 2013 to a negative $9 million in fourth-quarter 2014.
Performance in Detail
Total revenue for the quarter came in at $3.95 billion, down 3.1% year over year. The fall was due to lower net interest income, partially offset by higher non-interest income. However, total revenue was above the Zacks Consensus Estimate of $3.81 billion. Total revenue for the year came in at $15.4 billion, beating the Zacks Consensus Estimate of $15.2 billion, but lower than the 2013 tally of $16.0 billion.
Net interest income was $2.1 billion, down 7.5% year over year. The fall was mainly due to lower core net interest income and reduced scheduled accretion net of contractual interest. Moreover, net interest margin decreased 49 basis points (bps) year over year to 2.89%.
Non-interest income climbed 2.4% year over year to $1.9 billion. The uptick was mainly due to increased asset management revenue, along with higher corporate service fees, higher service charges on deposits and other, including net securities gains.
PNC Financial’s non-interest expense stood at $2.5 billion, up 1% from the prior-year quarter. The rise was mainly due to higher charges related to occupancy, equipment marketing and other, partially offset by lower costs related to personnel.
Credit Quality
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