PNC Financial Services Group, which Friday reported profits slipped for the fourth quarter on lower revenue, will continue to cut expenses this year as it pushes to boost results in a challenging environment.
“The coming year looks a lot like 2014 at the moment, which means revenue growth will remain a challenge, particularly until we get a rise in rates,” CEO William Demchak said in a conference call with analysts Friday.
Like other banks, PNC is being squeezed by persistently low interest rates and heightened competition for booking loans.
“The willingness of competitors to stretch on risk and yield … I think is probably going to accelerate,” Mr. Demchak said.
Pittsburgh’s dominant bank expects the U.S. economy to continue to expand “at a steady pace” in the coming year, and that record low interest rates will begin to rise in the second half, chief financial officer Robert Q. Reilly told analysts.
Lowering expenses will continue to be a focus at PNC, with the bank targeting another $400 million in cost cuts this year, Mr. Reilly said. The expected savings come on top of more than $500 million in expense cuts in 2014 and nearly $800 million in 2013.
As in the past, the savings will be reinvested in PNC’s businesses, primarily for technology upgrades and the continued redesign of bank branches, he said.
PNC is on track to have converted some 300 of its roughly 2,700 branches in its multistate footprint to a new streamlined format — which employs more technology and eliminates teller windows — by the end of this quarter, Mr. Demchak said.
That conversion is becoming increasingly important as the number of customers who handle the majority of their transactions electronically approaches 50 percent, he said.
Pittsburgh-based PNC, the nation’s seventh-biggest bank, said it earned $988 million, or $1.84 per share, in the final quarter of 2014. That was off 2 percent from $1 billion, or $1.87, in the year-earlier period. The results beat the average estimate on Wall Street of $1.74 per share.
Revenue dropped 3 percent for the quarter to $3.95 billion from $4.07 billion.
For the full year, PNC earned $3.95 billion, or $7.30 per share, vs. $3.95 billion, or $7.36, in 2013.
Revenue for 2014 fell 4 percent to $15.38 billion from $16.01 billion.
“PNC had a successful year in 2014,” Mr. Demchak said in a statement. “While the near-term revenue environment remains challenging, I like how we are positioned heading into 2015.”
PNC’s shares rose $2.02 Friday, or 2.45 percent, to close at $84.44.
First Published: January 17, 2015, 5:00 a.m.
