PNC Financial: 2Q‘26 Earnings: Positive Momentum, Beat & Raise, & Bonds Are Fair Trading Through Money Centers

Research evidence excerpt

PNC Financial: 2Q‘26 Earnings: Positive Momentum, Beat & Raise, & Bonds Are Fair Trading Through Money Centers

up 25% QoQ and 80% YoY, driven by record

M&A advisory fees and strong activity across other capital markets businesses. Card and cash

management revenue increased $34mn QoQ due to seasonally higher consumer transaction

volumes and growth in treasury management product revenue. Management guides 3Q'26

fee income down 5-5.5% QoQ off the $2.3bn 2Q'26 baseline, and other noninterest income

of $150-$200mn. For FY'26, management guided for noninterest income to increase 9%

YoY, from up 6% within last quarter's revision. Capital markets revenues were elevated in

2Q'26 as management stated there was some pull forward into the quarter. Management

stated that they could see Capital Markets revenues down 20% QoQ, which is the main driver

of the fee income guidance to be down ~5% QoQ for 3Q'26.

Noninterest expense was $4.1bn, up 21% YoY and 9% QoQ, but included $261mn of

integration costs and 2Q'26 significant items. Excluding those items, adjusted noninterest

expense was $3.8bn, up 5% QoQ, primarily reflecting increased business activity, higher

marketing spend, and continued investments to support business growth. The efficiency ratio

was 60%, flat YoY and improving 1 ppt QoQ. Management guides adjusted noninterest

expense down 2-3% QoQ in 3Q'26. For FY'26, management is guiding for noninterest

expenses to increase 8.5% YoY, up from their prior guidance of up 7.0% YoY.

Asset quality metrics strengthened across all key indicators. NPLs/Total Loans were 0.55%,

down 7 bps QoQ and 10 bps YoY. Delinquencies/Total Loans were 0.39%, down 4 bps QoQ.

NCOs/Average Loans were 0.25%, down 4 bps QoQ. Provision for credit losses was $191mn,