Rise in NII & Fee Income to Aid PNC Financial's Q3 Earnings

The PNC Financial Services Group, Inc. PNC is scheduled to report third-quarter 2025 earnings on Oct. 15, before market open. Its revenues and earnings are expected to have improved on a year-over-year basis.In the second quarter, PNC’s earnings beat the Zacks Consensus Estimate, driven by a rise in net interest income (NII) and the loan balance. However, an increase in expenses and provision for credit losses, along with declining fee income, acted as a spoilsport.PNC has an impressive earnings surprise history. Its earnings surpassed estimates in the trailing four quarters, with an average surprise of 7.93%.The PNC Financial Services Group, Inc Price and EPS Surprise The PNC Financial Services Group, Inc price-eps-surprise | The PNC Financial Services Group, Inc QuoteFactors to Impact PNC Financial’s Q3 PerformanceLoans & NII: In September, the Federal Reserve lowered interest rates by 25 basis points to 4.00–4.25%. As rates remained largely stable throughout most of the quarter,  funding and deposit costs likely stabilized. This is likely to have supported growth in PNC Financial’s NII for the third quarter. The company expects NII to rise 3% sequentially in the third quarter of 2025.The Zacks Consensus Estimate for NII of $3.66 billion indicates a sequential rise of 2.9%. Our projection for NII is pegged at $3.67 billion.The overall lending environment was also impressive. According to the Fed’s latest data, demand for commercial and industrial, real estate, and consumer loans remained solid during the first two months of the quarter. As such, PNC’s loan growth is expected to have witnessed an improvement. The company expects average loans to rise 1% sequentially in the third quarter of 2025. Our projection for the average loan is the same as the company guidance.Non-Interest Revenues: Mortgage rates declined notably during the third quarter compared with levels seen at the beginning of the year. Although rates fluctuated throughout the period, they remained range-bound. As such, refinancing activities and origination volumes witnessed some improvement. This is likely to have positively impacted PNC’s mortgage revenues in the quarter to be reported.The Zacks Consensus Estimate for the residential and commercial mortgage revenues is pegged at $129.6 million, indicating a rise of 1.6% sequentially. Our estimate for the metric is pegged at $132.5 million.Moreover, the third quarter witnessed solid market volatility and client activity because of uncertainty related to Trump’s tariff plans and changes in the Fed’s policy stance. Also, the performance of the equity markets was decent. Hence, PNC Financial’s asset management and brokerage income is likely to have witnessed growth. The consensus estimate for the asset management and brokerage income is pegged at $397.9 million, indicating 1.8% growth sequentially. We project asset management and brokerage income to be $400.9 million.Global mergers and acquisitions rebounded notably in the third quarter of 2025 after reaching lower levels in April and May, following President Trump’s announcement of ‘Liberation Day’ tariff plans. But as corporates adapted to an evolving geopolitical and macroeconomic scenario, deal-making activities picked up. This is likely to have aided PNC’s capital markets and advisory revenues during the quarter.The consensus estimate for the company’s capital markets and advisory income of $357.7 million indicates an 11.4% sequential rise. We project the metric to be $382.4 million.Further, the Zacks Consensus Estimate for card and cash management revenues is pinned at $749.8 million, indicating a 1.7% sequential rise. The consensus estimate for lending and deposit services is pegged at $324.8 million, indicating a 2.4% improvement from the prior quarter’s actual. Our estimates for card and cash management revenues and lending and deposit services are pegged at $713.5 million and $319.4 million, respectively.Management expects non-interest income to rise 3-4% sequentially in the third quarter of 2025. The Zacks Consensus Estimate for the metric is pegged at $2.13 billion, indicating a 1.3% rise from the last quarter. Our projection for the metric is $2.12 billion.Expenses: PNC’s expenses are expected to have continued flaring up during the third quarter due to its investments in franchise expansion, technology and digitalization, which might have hindered the bottom-line growth. However, the company’s cost-containment measures might have offset the rise to some extent.Management expects adjusted non-interest expenses to rise 2% sequentially in the third quarter of 2025. Our estimate for the metric is pegged to increase 2.7% sequentially at $3.47 billion.Asset Quality: PNC Financial is likely to have kept higher reserves for potential delinquent loans, primarily in commercial lending, given the expectations of persistent tariff-related uncertainty and the expectation of higher, longer-term interest rates. Management expects net charge-offs to be around $275-$300 million, up from $198 million in the second quarter of 2025. The Zacks Consensus Estimate for non-performing assets (NPAs) is pegged at $2.21 billion, indicating an increase of 3.2% from the previous quarter. Also, the consensus estimate for non-performing loans (NPLs) is pinned at $2.21 billion, implying a rise of 4.6%. Our estimates for NPAs and NPLs are $2.05 billion and $2.02 billion, respectively. We expect provisions for credit losses to be $218.2 million, indicating a sequential jump of 27.6%.What Our Model Unveils for PNCOur proven model predicts an earnings beat for PNC Financial this time. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That is exactly the case here.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: PNC Financial has an Earnings ESP of +1.37%.Zacks Rank: The company currently carries a Zacks Rank of 3.PNC Financial’s Q3 Earnings & Sales ExpectationsThe Zacks Consensus Estimate for third-quarter earnings per share has been revised upward to $4.05 over the past seven days. This implies a year-over-year rise of 16.1%.The Zacks Consensus Estimate for quarterly revenues of $5.83 billion indicates a 7.3% year-over-year increase.PNC projects total revenues to increase 2-3% in the third quarter from the $5.7 billion reported in the second quarter of 2025.Other Bank Stocks to ConsiderHere are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:The Earnings ESP for State Street Corporation STT is +0.45% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The company is slated to report third-quarter 2025 results on Oct. 17. Over the past seven days, the Zacks Consensus Estimate for STT's quarterly earnings has been revised upward to $2.61 per share.Northern Trust Corporation NTRS is also scheduled to announce third-quarter 2025 results on Oct. 22. The company has a Zacks Rank #3 at present and an Earnings ESP of +0.55%. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Quarterly earnings estimates for NTRS have been revised upward to $2.24 per share over the past week.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>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 The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report State Street Corporation (STT): Free Stock Analysis Report Northern Trust Corporation (NTRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks