(Reuters) – PNC Financial Services Group on Tuesday cut its full-year net interest income forecast, casting a shadow over the bank’s second-quarter earnings.
The bank’s shares fell by about 3.5% in pre-market dealings, as it expected net interest income to rise by 5% to 6% in 2023 over last year, compared to its previous forecast of 6% to 8% growth.
For the three months ended June 30, PNC earned $3.36 per share. Analysts expected a profit of $3.28 per share, according to Refinitiv IBES data.
The drop in the full-year forecast for net interest income — the difference between interest banks earn on loans and payment of deposits — came even as PNC reported a 15% jump in that income to $3.51 billion.
The Fed’s interest rate increases, intended to rein in flat inflation, have increased lenders income from larger interest payments. But banks have warned that higher borrowing costs may soon start to affect the demand for loans.
To attract more customers, banks are also expected to pay higher interest on deposits, a move that could increase costs and affect profits.
Lenders have also been allocating more capital to their rain funds, in response to uncertainty about the economy’s path in the wake of the US central bank’s strong monetary tightening.
The Palestinian National Company made $146 million in provisions for credit losses in the second quarter, compared to $36 million in the previous year.
Earnings reports from US lenders are expected to shed light on the health of the industry after the collapse of three banks earlier this year.
(Reporting by Nikit Nishant in Bengaluru; Editing by Sriraj Kaluvella)