PNC passes Fed stress test, plans 6% dividend increase

Published 01/07/2025, 21:54
PNC passes Fed stress test, plans 6% dividend increase

PITTSBURGH - PNC Financial Services Group, Inc. (NYSE:PNC), a $76 billion market cap financial institution currently trading near its InvestingPro Fair Value, announced it has received the results of the Federal Reserve’s 2025 Comprehensive Capital Analysis and Review (CCAR), maintaining its Stress Capital Buffer (SCB) at the regulatory minimum of 2.5% for the period beginning October 1, 2025.

The bank reported that its Common Equity Tier 1 (CET1) ratio stood at 10.6% as of March 31, 2025, significantly exceeding the regulatory minimum plus SCB requirement of 7.0%. Under the Federal Reserve’s Supervisory Severely Adverse scenario, PNC’s minimum CET1 ratio is projected to be 9.7%, well above the 4.5% regulatory minimum. This robust capital position aligns with PNC’s "GOOD" overall financial health score on InvestingPro, which provides comprehensive analysis of 1,400+ US stocks.

Following these strong results, PNC plans to recommend to its board of directors a 10-cent increase to its quarterly cash dividend, raising it to $1.70 per share in the third quarter of 2025. This represents a 6% increase from the current dividend, building on the bank’s impressive 14-year streak of consecutive dividend increases and current 3.43% yield. The board is expected to consider this recommendation at its July 3 meeting.

The financial institution also stated that its board has authorized a repurchase framework under a previously approved program of up to 100 million common shares, with approximately 41% still available for repurchase as of March 31, 2025. Share repurchase activity in the third quarter is expected to remain consistent with second-quarter levels.

PNC noted that actual repurchase amounts and timing will depend on market and economic conditions. The information in this article is based on a press release statement from the company.

In other recent news, PNC Financial Services Group has announced several key developments. The company introduced PNC Mobile Accept, a mobile payment solution targeted at small businesses, allowing them to process card payments through the PNC Mobile Banking App without a monthly fee. This service is aimed at micro businesses with annual card transactions under $300,000 and offers features like tax-and-tip functionality and near real-time transaction tracking. Furthermore, PNC Financial’s Chief Operating Officer, E William Parsley III, will step down from his role in 2025, transitioning to Executive Advisor until the end of the year.

On the financial front, RBC Capital adjusted its price target for PNC Financial to $195 while maintaining an Outperform rating, highlighting the bank’s robust commercial banking operations and diversified fee-based businesses. Meanwhile, Keefe, Bruyette & Woods reduced their price target to $185 and maintained an Underperform rating, noting a mixed earnings report with stronger-than-expected net interest income but weaker core fee income. Evercore ISI also revised its price target to $180, maintaining an Outperform rating, and adjusted its earnings per share estimates due to cautious credit forecasting, particularly in the office commercial real estate sector. Despite these adjustments, Evercore ISI remains optimistic about PNC’s growth prospects and financial returns.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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