A year ago, banks set aside billions of dollars to handle expected deterioration of loans because of the pandemic. As the economic outlook has brightened and vaccines have been distributed, that provision build-up has unwound.

The PNC Financial Services Group, which provides services including wealth management, today reported net income from continuing operations of $1.826 billion, more than doubling from $759 million a year ago. The big profit jump reflected a reversal of the large build-up of provisions for bad loans a year earlier when the pandemic started. 

In Q1, there was a provision “recapture” of $551 million, against a provision of $914 million in the first three months of last year, a time when banks set aside capital to deal with the predicted economic tumult.

Revenues actually slowed in the first quarter ($4.22 billion) from a year earlier ($4.336 billion). Non-interest costs were a touch higher, at $2.574 billion, versus $2.543 billion in Q1 2020.

The bank’s Common Equity Tier 1 ratio rose to 12.6 per cent at the end of March this year from 9.4 per cent a year earlier. The figure is a standard international measure of a bank’s capital buffer. Return on equity rose to 14.3 per cent from 7.5 per cent. 

The firm said that its planned acquisition of BBVA USA, as reported originally here, was on track and expected to close in the middle of this year. (PNC had built a war chest of funds after selling its stake in BlackRock earlier in 2020 in a transaction that netted it about $17 billion.)