Financial services institution PNC Financial Stock (NYSE:PNC) returned to oversold levels. The company beat analyst estimates with revenue in line in its first-quarter 2022 earnings release. Its commercial loans grew at the fastest organic rate since defensive drawdowns began during the pandemic. Interest rate volatility has increased as the conflict between Russia and Ukraine negatively affects some financial markets. The highest inflation spike in nearly four decades prompted the US Federal Reserve to plan seven rate hikes this year. Banks are the main beneficiaries of rising interest rates as demand for loans increases. The Company is well positioned to benefit from rising interest rates through net interest income growth and net interest margin (NIM) expansion. The company is poised to reap the rewards of its earlier acquisition of BBVA as it sees a 50% increase in sales at its branches. Cautious investors looking for exposure to consistent, high-performing banking play can watch for opportunistic pullbacks in PNC Financial stock.
Publication of results for the first quarter of fiscal year 2022
On April 14, 2022, PNC Financial released its fiscal first quarter 2022 results for the quarter ending March 2022. The company reported earnings per share (EPS) of $3.29 versus $2.78 according to estimates. consensus analysts, a beat of $0.51. Revenue rose 11.2% year-over-year (YoY) to $4.69 billion, beating analyst estimates of $4.72 billion. Net loan write-offs were $137 million or 0.19% of annualized average loans. Net interest margin improved sequentially to 2.28% from 2.27% in the prior Q4 2021. Average loans increased 1% year-on-year to $290.7 billion. Average commercial loans increase by $1.8 billion. Average consumer loans of $95.1 billion remained flat. Net loan write-offs increased by $13 million to $137 million. The Basel III Common Equity Tier 1 capital ratio was 9.9% as of March 31, 2022 and 10.3% as of December 31, 2022. The Company increased its quarterly dividend by 20% to $1.50 per April 1, 2022.
Takeaways from the conference call
PNC Financial CEO Bill Demchak gave an upbeat account of the bank starting the year off to a strong start as it increased lending and securities and controlled spending while maintaining credit quality by maintaining reserves and strong capital levels. Fees fell more than expected because Russian-Ukrainian conflict affected hurt some capital markets. He looks forward to the increased benefits of rising interest rates as loan demand grows. Sales by branch were 60% in March 2022 compared to December 2021, thanks to improvements in mortgages, cards and investment products. Cash commercial lending was up $6 billion in the quarter and $7 billion excluding the impact of the PPP loan write-off and its increase in April. He explained the share buyback in a rising rate environment: “We also remain active on the securities side with net purchases of nearly $6 billion in the quarter. From a balance sheet perspective, stocks were offset by unrealized losses due to rising interest rates, which Rob will discuss in a few minutes. This does not impact our regulatory capital or earnings, but during the quarter we moved approximately $20 billion of our available-for-sale securities to help maturity limit future valuation shifts due to fluctuations in interest rates. Importantly, we saw a strong rebound in the performance of our securities. Overall, we believe we are well positioned to weather rising interest rates to drive net interest income growth and NIM expansion throughout the year.
PNC Opportunistic Withdrawal Levels
Using rifle charts on the weekly and daily time frames provides an accurate view of the price action playing field for PNC stocks. The weekly Rifles chart formed an inverse PUP breakdown through the $176.61 Fibonacci level (fib) and the lower weekly Bollinger Bands (BB) lie near the $169.78 fib. The weekly 5-period moving average (MA) resistance drops to $186.06 with a 50-period MA at $196.13 and a 15-period MA at $198.26. The 200-period weekly moving average support stands at $149.26. The weekly stochastic has formed a mini inverse staircase pup falling through the 20 band. The weekly weak market structure (MSL) buy triggers on a break above $195.00 The daily Rifle chart formed an inverse puppy breakdown as the 5-period MA falls to $180.37, followed by the 15-period MA to 184, $73 and daily lower BBs at $169.50. The daily 50-period MA resistance lies at $193.13 and the 200-period MA resistance at $197.29. The daily buy of MSL is triggered on a break above the $184.66 price level. The daily stochastic failed the 20-band reel and reversed to fall back below the 20-band on a mini stochastic reverse pup. Cautious investors can watch for opportunistic pullbacks at the $171.12, $167.63, $158.64, $153.72, $151.62 and $146.06 levels. The upward trajectories range from the $193.03 fib level to the $226.25 fib level.