PNC Financial Services (PNC 0.01%), the holding company of the $412 billion asset PNC Bank, reported a 28% drop in first-quarter profits as the bank sets aside more cash for future loan losses during the coronavirus pandemic.

Net income in the first quarter of 2020 was $915 million, or $1.95 per share.

The bank recorded a $914 million credit provision, which is the cash banks set aside to cover potential loan losses. That was nearly five times the $189 million credit provision the bank took in the first quarter of 2019.

PNC Bank

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"Our results for the first quarter were good, but the extraordinary changes in the economic backdrop occurring in March and the implications of the broad-based response to the COVID-19 outbreak
had a material impact on our provision for credit losses," Bill Demchak, chairman, president, and CEO of PNC, said in a statement. "With our strong capital and liquidity and leading technology, we will continue to serve our stakeholders while navigating the current challenges."

The bank continued to pay its normal dividend of $1.15 per common share, even as its common equity tier 1 ratio (CET1) continued to decline. The CET1 is a closely watched capital buffer that measures a bank's core equity by its total risk-weighted assets. PNC's CET1 ratio at the end of Q1 was 9.4%, down 10 basis points from the fourth quarter of 2019 and down from 9.8% in last year's first quarter. That is definitely toward the lower end when you look at some of the other big banks.

However, PNC CFO Robert Reilly said on the company's earnings call that the bank believes it could continue to support its current dividend if the the CET1 ratio got all the way down to 8.5% under a severely adverse scenario.