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PNC Profit Increases 9.7% on Expense Cuts and Lower Provisions

October 16, 2013

PNC Financial Services Group Inc. (PNC:US), the second-biggest U.S. regional bank, posted a 9.7 percent profit increase as the lender cut expenses and set aside less for bad loans.

Third-quarter net income rose to $1 billion, or $1.79 a share, from $939 million, or $1.64, a year earlier, the Pittsburgh-based bank said today in a statement. The average estimate (PNC:US) of 31 analysts surveyed by Bloomberg was $1.62.

Chief Executive Officer Bill Demchak said in September he expects expenses to drop 5 percent this year and that revenue increases won’t come easily. The bank is starting to see the benefits of its expansion into the U.S. Southeast with the 2012 purchase of RBC Bank USA and is focusing on fee-income businesses including wealth, he said last month.

“Even in the face of an environment that is challenging the entire industry, our businesses are successfully growing loans, and we are leveraging our high-quality balance sheet to drive revenue,” Demchak, 51, said in the statement.

Banks suffered declines in mortgage-banking revenue amid a jump in the benchmark 10-year Treasury yield, which rose in the third quarter to the highest since 2011, curbing borrower refinancings. JPMorgan Chase & Co. (JPM:US), the biggest U.S. bank, said last week that mortgage fees and related revenue plunged 65 percent to $839 million. Wells Fargo & Co. (WFC:US), the largest home lender, said mortgage-banking revenue tumbled 43 percent.

Demchak has said he plans to redefine retail banking by finding a balance between branch and mobile services. The lender reduced tellers by about 600 in the six months through Sept. 9, deploying some employees to other positions, he said then. The company will close almost 200 branches this year and open others in the Southeast where necessary, Demchak said.

“Given the changes in the operating environment, banking in the future has got to be very different from banking in the past,” Demchak said in September.

To contact the reporter on this story: Laura Marcinek in New York at

To contact the editor responsible for this story: Christine Harper at; David Scheer at

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