PNC Expects Loan Growth After Fed’s Rate Cut

PNC Financial Services Group said Tuesday (Oct. 15) that it is prepared for lending to pick up after the Federal Reserve cut interest rates in September.

During the third quarter, which ended Sept. 30, the bank’s average loans, credit quality performance and allowance for credit losses remained stable, according to a Tuesday earnings release.

“CNIB [Corporate & Institutional Banking] continues to have great momentum as new loan production and commitments increased this quarter,” William S. Demchak, president and CEO of PNC, said Tuesday during the bank’s quarterly earnings call.

“While overall loan utilization has remained soft, the recent Fed actions to lower interest rates and the expectation of further cuts is likely to spur greater demand as we move ahead.”

The Federal Reserve cut interest rates by 0.5% on Sept. 18, marking the first such cut in four years. It attributed the move to progress on inflation and the balance of risks.

PNC expects the Federal Reserve to cut the benchmark rate two more times this year, by 25 basis points at both the November and December meetings, Robert Q. Reilly, executive vice president and chief financial officer at PNC, said during the call.

The bank’s overall credit quality remains relatively stable, which Demchak said reflected the bank’s “thoughtful approach to managing risk, customer selection and long-term relationship development.”

PNC is well positioned to service its customers amid the expected return of loan growth, Demchak said.

The bank continues to invest in its branch network, building density in its most attractive growth markets, and is seeing success from those efforts to expand in the retail market in terms of customer households and checking accounts, Demchak said.

During the third quarter, PNC also saw its net interest income increase 3% due to higher yield on interest-bearing assets and its fee income rise 10%, driven by higher capital markets and advisory activity, according to the earnings release.

“In summary, we delivered strong results in the quarter, and we remain well positioned to continue our momentum,” Demchak said. “In fact, we’re in the middle of our strategic planning process, and I can’t recall a time when our organic growth opportunities have ever been more attractive.”