By Gina Heeb
Shares of regional banks fell after some of the larger players reported double-digit profit declines in the first quarter.
PNC Financial said net income fell 22% from a year earlier to $1.2 billion, or $3.10 a share. Analysts polled by FactSet expected $3.01 a share.
At M&T Bank, net income dropped by a quarter to $505 million, the bank said Monday. That amounted to $3.02 a share, slightly above the $3.01 that analysts forecasted.
Banks are broadly under pressure from higher rates, which cut into profits because they have to pay more interest on deposits, especially at big-but-not-huge, midsize and smaller banks. A key profitability metric called net interest income fell 9% at PNC and 8% at M&T.
PNC shares fell 2% on Tuesday, and M&T shares declined 2.6%. The KBW Nasdaq Bank Index and the SPDR S&P Regional Banking ETF were each around 1.7% lower, while the S&P 500 was down slightly.
Banks dont expect relief anytime soon, especially with rates expected to be higher for longer.
For the full year, PNC expects net interest income to fall between 4% and 5% from 2023. M&T raised its estimate for full-year net interest income slightly to $6.8 billion or more in the results Monday, compared with more than $7 billion in 2023.
Both banks also set aside more money for Federal Deposit Insurance Corp. fees related to the failures of Signature Bank and Silicon Valley Bank last year. They paid big FDIC fees last quarter, too, in order to replenish a government fund to make uninsured depositors at those banks whole.
Up next: Regional banks including U.S. Bancorp, Citizens Financial and First Horizon are scheduled to report Wednesday.
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(END) Dow Jones Newswires
April 16, 2024 11:00 ET (15:00 GMT)
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