Bad Loan Provisions Reversal Boosts PNC's Bottom Line

Tom Burroughes

16 April 2021

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 from a year earlier . 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.