Hot Financial stock to watch: PNC Financial Services Group Inc (NYSE: PNC)

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PNC Financial Services Group Inc (NYSE: PNC) stock rose over 1.3% on July 15th, 2020 (as of 12:02 pm GMT-4 ; Source: Google finance). The group’s Average loans rose 10% yoy to $24.5 billion, during the second quarter of 2020. The Average commercial loans rose 15% yoy to $189.3 billion as Paycheck Protection Program (PPP) lending under the CARES Act and higher utilization of loan commitments driven by the economic impact of the pandemic on customer liquidity preferences. The group’s Average deposits also rose 16% yoy to $45.5 billion, driven by rising commercial deposits reflecting pandemic-related accumulation of liquidity by customers as well as from government stimulus payments and lower consumer spending. The group’s Average investment securities rose 5% to $4.0 billion, during the second quarter against first quarter of 2020.

The firm maintained its quarterly cash dividend on common stock payable on August 5, 2020 of $1.15 per share, which is consistent with the second quarter dividend paid on May 5, 2020. The Basel III common equity Tier 1 capital ratio improved to 11.3% as at June 30, 2020 as compared to 9.4% in March 31, 2020. Moreover, the firm’s Provision for credit losses rose to $2.5 billion for the second quarter against $914 million in the first quarter due to ongoing pandemic. Provision was $1.7 billion for the commercial portfolio and $720 million for the consumer portfolio. Nonperforming assets rose $200 million, or 11%, to $2.0 billion at June 30, 2020 against March 31, 2020 due to current uncertainty. Net loan charge-offs rose $236 million during the second quarter against $212 million for the first quarter. The group also divested its 22.4% equity investment in BlackRock in May 2020 by selling 31.6 million shares in a registered offering and 2.65 million shares repurchased by BlackRock.

However, the group’s Total revenue fell $260 million, or 6% to $4.1 billion during the quarter. Net interest income rose 1% to $2.5 billion hurt by lower rates on deposits and borrowings and higher average loans, balances held with the Federal Reserve Bank and securities which was partially offset by lower yields on earning assets. Net interest margin fell 32 basis points to 2.52% hurt by full quarter impact of the 1.5 percentage point reduction in the federal funds rate by the Federal Reserve in March 2020.

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