PNC Financial Services Group (PNC 1.06%) reported results for the second quarter of 2025 on Wednesday, July 16, posting net interest income of $3.56 billion (up 7.7% year over year), net income of $1.64 billion ($3.85 per diluted share), 4.6% revenue growth, and 2% loan growth driven by commercial production in new markets. Positive operating leverage delivered pre-provision net revenue (PPNR) growth of 10% quarter over quarter, tangible book value rose 4% sequentially, and the common dividend was increased by 6% to $1.70 per share.
Management tightened non-interest expense controls and modestly revised non-interest income guidance for the full year 2025 due to macroeconomic uncertainty.
PNC Managed Disciplined Loan Growth and Market Share Gains in New Geographies
Second quarter average loans reached $323 billion, up $6 billion (2%) sequentially, with new commercial and industrial (C&I) loan production reaching a 10-quarter high. The Southwest region saw 6% year-over-year consumer checking growth, contrasting with slower momentum in legacy markets as stated elsewhere in the call.
"The momentum is really good at the moment. But as we've seen, that can be disrupted pretty easily by, you know, the political environment in tariffs."
— Bill Demchak, Chairman and CEO
Persistent organic client acquisition in new and expansion markets positions PNC to participate in industry loan growth and potentially outperform, given efforts in newer markets, even as exogenous risks such as tariffs create potential near-term volatility in utilization rates and demand.
Expense Discipline and Operating Leverage Were Bolstered by Technology and Efficiency Efforts
Non-interest expense was flat quarter-over-quarter despite increases in technology spending and seasonal marketing, enabling the company to achieve 4% positive operating leverage and 10% PPNR growth. Management reiterated a $350 million 2025 cost savings target, with automation and artificial intelligence (AI) adoption augmenting ongoing process efficiencies.
"This may accelerate it, but continuous improvement for years has been figuring out how to do the same workload with less, and AI is gonna be a big part of that. It's we're looking at it and everything we do."
— Bill Demchak, Chairman and CEO
Effective cost management while investing in differentiated technologies increases the probability of sustainable margin expansion for PNC Financial, which can help buffer against cyclical revenue fluctuations and industry competition.
Capital Deployment Flexibility and Regulatory Advantage Amid Industry Constraints
The company ended the second quarter with a CET1 ratio of 9.4% (inclusive of Accumulated Other Comprehensive Income), exceeding stress capital buffer requirements and enabling the return of approximately $1 billion through dividends and buybacks. Balance sheet resilience is reinforced by the lowest start-to-trough capital depletion (80 basis points) among peers in the Federal Reserve’s 2025 stress test.
"We did up our share repurchases as a result in the second quarter and said that we're going to sustain that $300 million to $400 million of repurchases into the third quarter. You know, obviously, the highest and best use of our capital is for loans."
— Rob Reilly, Executive Vice President and CFO
Regulatory capital flexibility and proactive capital return provide a strategic buffer for PNC Financial to selectively pursue growth opportunities and defend market share.
Looking Ahead
Full-year 2025 guidance was updated to reflect expected average loan growth of approximately 1% (previously stable), net interest income up about 7% (raised from up 6%-7%), and non-interest expense up about 1% for the full year 2025. Fee income growth is now guided at up approximately 4%-5% (down from up 5%) for the full year 2025 due to observed headwinds in mortgage and private equity valuations. Management projects net charge-offs of $275 million to $300 million for the third quarter, net interest income up roughly 3% sequentially, and total revenue up 2%-3%, with continued disciplined share repurchases of $300 million anticipated.