PNC Financial Services Group (NYSE: PNC) reported a 1% rise in earnings for the second quarter of 2019 helped by lower income tax expenses as well as higher interest income and a rise in non-interest income. The results exceeded analysts’ expectations.

Net income rose by 1% to $1.37 billion or $2.88 per share. Revenue increased 3% to $4.44 billion, helped by higher net interest income and an increase in non-interest income.

Net interest income grew 4% year-over-year as higher loan and securities yields and balances were partially offset by higher deposit and borrowing costs. The non-interest income rose 2% helped by higher debit and credit card revenue, as well as a gain on the sale of the retirement record keeping business and higher net securities gains.

PNC Financial Q2 profit rises 1% beats estimates

Non-interest expenses rose by 1% as a result of the asset write-offs and ongoing business investments reflected in higher personnel, occupancy and marketing expense. These increases were offset in part by a decrease in FDIC insurance due to the elimination of the surcharge.

For the second quarter, average loans rose by 5% year-over-year driven by growth in both commercial and consumer lending balances. The overall credit quality remained strong as non-performing assets remained virtually flat from last year, a 30% jump in net charge-offs, and allowance for loan and lease losses increased by 5%.

Average total assets increased 6% primarily due to higher loans and investment securities. Average investment securities increased by 8% and quarter-end balances grew by 10% due to net purchase activity of primarily agency residential mortgage-backed securities near the end of the second quarter. Average balances held with the Federal Reserve Bank decreased to $13.2 billion from $20.7 billion a year ago as investment of liquidity continued.

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PNC returned $1.2 billion of capital to shareholders in the second quarter of 2019 through repurchases of 6 million common shares for $802 million and dividends on common shares of $431 million. On July 9, 2019, the PNC board of directors raised the quarterly cash dividend on common stock by 21% to $1.15 per share, effective with the August 5, 2019 dividend payment date.

Over the past two years, US economic growth has accelerated to above its long-run trend. However, growth is expected to slow over the course of 2019 and into 2020. PNC Financial expects that further gradual improvement in the labor market this year, including job gains and rising wages, will be another positive for consumer spending. Inflation has slowed in early 2019, to below the FOMC’s 2% objective, but is expected to gradually increase over the next two years.

Shares of PNC Financial ended Tuesday’s regular session down 1% at $138.76 on the NYSE. Following the earnings release, the stock rose 0.71% in the pre-market session.

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