A clutch of US regional banks reported strong third-quarter earnings this week, powered by robust loan demand from businesses, adding to signs that the economy remained resilient despite rising borrowing costs, Reuters reported.
Earlier in the week, the biggest US banks such as JPMorgan Chase, Bank of America, Wells Fargo and Citigroup also reported higher loan balances, even as weakness in the capital markets hit their investment banking revenue.
People have accepted global uncertainty as the new normal and are pushing forward with operations, PNC Financial CEO William Demchak said. "The clouds are as dark as they ever were, but the economy's still strong. People are investing into it," Demchak added.
PNC led the regional banks' loan growth at 14.2% in the third quarter, followed by U.S. Bancorp at 8%, M&T Bank at 5.5% and Citizens Financial at 5.29%. The robust borrowing activity defied rising expectations that still-high inflation fueled by the Iran war and the Federal Reserve's September interest rate hike could chill corporate capital expenditures and dampen borrowing appetite.
Top regional banking executives said loan pipelines remained strong and they had not seen any slowdown yet in demand. Citizens Financial said loan demand actually started to pick up in the last couple of weeks as the bank entered the fourth quarter.
PNC's own earnings release confirmed the picture: third-quarter net income of $2.1 billion, diluted earnings per share of $4.97, or $5.09 as adjusted, total revenue of $6.56 billion, up 11% from a year earlier, and average loans of $372.2 billion, up 14% year over year. Net interest income rose 15% year over year to $4.21 billion.