On Nov 19, 2014, we issued an updated research report on The PNC Financial Services Group, Inc. (PNC). Shares of this Pennsylvania-based banking giant have gained 18% in a year’s time. We believe this growth story comes on the back of the company’s continued focus on cost management, apart from a number of factors including sustained organic growth, a strong capital position and steady capital deployment activities.
During 2013, management achieved more than $775 million in expense savings, outpacing the target of $700 million. Further, as of Sep 30, 2014, the company achieved full-year 2014 continuous improvement savings (CIP) target of $500 million. Notably, the company’s non-interest expense was down 2% year over year in third-quarter 2014.
Though for fourth-quarter 2014, management anticipates non-interest expenses to be up by low single-digits owing to seasonality and continued investments in business and infrastructure, the increase is expected to be partially offset by projected cost savings from CIP. Also, management expects to continue the CIP in 2015 as well.
We believe PNC Financial is well positioned to drive operational efficiency through its cost-containment efforts.
Further, PNC Financial has been growing organically with the help of its financial strength. During the nine months ended Sep 2014, both loans and deposits increased 5% year over year. According to management, loans are expected to rise modestly in fourth-quarter 2014 mainly in the commercial portfolio.
However, litigation issues and the prevailing stringent regulatory landscape will continue to mar PNC Financial’s growth. Further, management expects net interest income to modestly decrease owing to the continued decline in purchase accounting accretion and interest rate spread compression.
Analysts’ mixed stance on the stock was reflected in the estimate revisions over the past 30 days. For 2014, the Zacks Consensus Estimate remained stable at $7.17 per share. For 2015, it declined slightly to $7.32 per share.
PNC Financial currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the finance space include Piper Jaffray Companies (PJC), Western Alliance Bancorporation (WAL) and Bridge Capital Holdings (BBNK). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment