PNC Financial Services Group (PNC)

Financial services giant PNC (NYSE:PNC) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 8.9% year on year to $5.92 billion. Its GAAP profit of $4.35 per share was 7.6% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE:PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.

At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.

PNC's primary competitors include other large U.S. financial institutions such as JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and U.S. Bancorp (NYSE:USB), as well as regional banks like Truist Financial (NYSE:TFC) and Fifth Third Bancorp (NASDAQ:FITB).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Thankfully, PNC Financial Services Group’s 5.8% annualized revenue growth over the last five years was decent. Its growth was slightly above the average banking company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. PNC Financial Services Group’s recent performance shows its demand has slowed as its annualized revenue growth of 1.6% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, PNC Financial Services Group reported year-on-year revenue growth of 8.9%, and its $5.92 billion of revenue exceeded Wall Street’s estimates by 1.8%.

Net interest income made up 61% of the company’s total revenue during the last five years, meaning lending operations are PNC Financial Services Group’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last four years, PNC Financial Services Group’s efficiency ratio has swelled by 4.7 percentage points, going from 65% to 60.3%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

PNC Financial Services Group’s efficiency ratio came in at 59% this quarter, close to analysts’ expectations. This result was 2 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects PNC Financial Services Group to rein in some of its expenses as it anticipates an efficiency ratio of 58.6%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for PNC Financial Services Group, its EPS declined by 1.5% annually over the last five years while its revenue grew by 5.8%. However, its efficiency ratio didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

PNC Financial Services Group’s two-year annual EPS growth of 3.7% was great and topped its 1.6% two-year revenue growth.

We can take a deeper look into PNC Financial Services Group’s earnings to better understand the drivers of its performance. PNC Financial Services Group’s efficiency ratio has improved over the last two yearswhile its share count has shrunk 1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q3, PNC Financial Services Group reported EPS of $4.35, up from $3.49 in the same quarter last year. This print beat analysts’ estimates by 7.6%. Over the next 12 months, Wall Street expects PNC Financial Services Group’s full-year EPS of $15.49 to grow 10.8%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

PNC Financial Services Group’s TBVPS grew at a sluggish 2.4% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 17.3% annually over the last two years from $78.40 to $107.84 per share.

Over the next 12 months, Consensus estimates call for PNC Financial Services Group’s TBVPS to grow by 7.9% to $116.33, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, PNC Financial Services Group has averaged a Tier 1 capital ratio of 10.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, PNC Financial Services Group has averaged an ROE of 11.5%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows PNC Financial Services Group has a strong competitive moat.

It was encouraging to see PNC Financial Services Group beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. On the other hand, its net interest income and net interest margin both missed. Overall, this print was mixed. The market seemed to be hoping for more, and the stock traded down 3.1% to $184 immediately following the results.

Updated: December 4, 2025 at 11:35 PM EST

Before deciding whether to buy PNC Financial Services Group or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

PNC Financial Services Group isn’t a terrible business, but it doesn’t pass our bar. To kick things off, its revenue growth was uninspiring over the last five years. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal.. On top of that, its TBVPS growth was weak over the last five years.

PNC Financial Services Group’s P/B ratio based on the next 12 months is 1.4x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $220.50 on the company (compared to the current share price of $198.27).