PNC Financial Services Group (PNC)

Financial services giant PNC (NYSE:PNC) reported revenue ahead of Wall Streets expectations in Q4 CY2025, with sales up 8.5% year on year to $6.07 billion. Its GAAP profit of $4.88 per share was 15.9% 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).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Unfortunately, PNC Financial Services Group’s 6.2% annualized revenue growth over the last five years was tepid. This was below our standard for the banking sector and is a tough starting point for our analysis.

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 3.2% 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 8.5%, and its $6.07 billion of revenue exceeded Wall Street’s estimates by 1.7%.

Net interest income made up 60.9% 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 alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, PNC Financial Services Group’s efficiency ratio has swelled by 1.1 percentage points, going from 67.3% to 59.8%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q4, PNC Financial Services Group’s efficiency ratio was 59%, beating analysts’ expectations by 45.8 basis points (100 basis points = 1 percentage point). This result was 4 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 58.2%.

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.

PNC Financial Services Group’s flat EPS over the last five years was below its 6.2% annualized revenue growth. 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.

For PNC Financial Services Group, its two-year annual EPS growth of 13.9% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, PNC Financial Services Group reported EPS of $4.88, up from $3.77 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects PNC Financial Services Group’s full-year EPS of $16.60 to grow 8.4%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. 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 2.9% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.9% annually over the last two years from $85.26 to $112.51 per share.

Over the next 12 months, Consensus estimates call for PNC Financial Services Group’s TBVPS to grow by 4.6% to $117.68, lousy 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 11.1%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, PNC Financial Services Group has averaged an ROE of 11.6%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

It was good to see PNC Financial Services Group beat analysts’ EPS expectations this quarter. We were also happy its tangible book value per share outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.8% to $221 immediately following the results.

Updated: January 16, 2026 at 6:49 AM 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. For starters, its revenue growth was uninspiring over the last five years. And while its estimated net interest income for the next 12 months implies growth will accelerate from its five-year trend, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal..

PNC Financial Services Group’s P/B ratio based on the next 12 months is 1.5x. Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $236.12 on the company (compared to the current share price of $221).