There was no reason to think that second quarter results would show a big operational shift for banks, and that has been the case so far, with banks still seeing pressure from flat spreads and weak loan demand, partly offset by reserve releases driven by better-than-feared credit quality evolution. So too with PNC Financial (PNC), where core net interest income was okay relative to expectations, but where core growth was still pretty soft.
I’m not bothered that this quarter’s results here weren’t outstanding, and they don’t change my view that this is a high-quality bank for the long term. With BBVA’s (BBVA) Compass in hand, PNC has some attractive growth opportunities – both in terms of expanding its footprint in higher-growth markets and in improving the operations at Compass. As the economy continues to recover, I expect this middle market-driven bank to benefit, I expect healthy growth for some time to come.
PNC isn’t a bargain basement stock, but I do think the valuation is reasonable, and I think long-term investors can reasonably expect an annualized long-term total return in the very high single-digits from here.
Read the full article here:
PNC Financial's Core Operations Still Under Some Pressure, But The Future Is Bright
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