PNC Financial Reaffirms Outlook as Loans, Fees and AI Investments Gain Momentum

Key Points

• PNC reaffirmed its third-quarter and full-year outlook, citing resilient consumer spending, broad commercial-lending demand and improving credit indicators. It expects net interest margin to exceed 3% by year-end.
• Loan and fee growth remain key drivers: commercial lending and commercial real estate have resumed growing, while capital markets, Harris Williams, cards and treasury management are reporting strong momentum.
• PNC is investing in AI, technology and branch expansion, including 300 planned additional branches, while integrating FirstBank ahead of schedule and maintaining a roughly 10% common equity tier 1 ratio.

The PNC Financial Services Group NYSE: PNC said it remains on track to meet its previously issued third-quarter and full-year guidance, citing resilient consumer spending, broad commercial lending demand and continued momentum in its expansion markets.

Speaking at an investor conference, President Mark Wiedman and Executive Vice President and Chief Financial Officer Rob Reilly outlined priorities including deeper customer relationships, expanded international capabilities, investment in artificial intelligence and continued branch expansion.

Reilly said PNC’s outlook for interest rates includes a likely rate increase, followed by potential additional 25-basis-point hikes in December and March. He said the company is positioned neutrally for 2026, with potentially greater benefits in later years if the yield curve steepens.

Consumer, Commercial Credit Remain Strong

Wiedman said the economy has been stronger than expected, pointing to broad-based earnings growth, consumer spending and improving customer balance sheets. He said spending among PNC customers was up 4% year over year across income cohorts, including lower-income customers.

He added that customer current-account balances at PNC were 20% higher than in 2019 after inflation. Spending growth has been particularly notable in gambling, higher-end travel and entertainment, while home-improvement spending has been less prominent, Wiedman said.

Reilly said consumer delinquencies have declined and commercial credit conditions remain favorable. He said PNC’s criticized assets, nonperforming loans and other leading credit indicators have improved.

While management did not identify broad credit problems, Reilly cited pressure in healthcare related to changes in the Affordable Care Act, distilleries amid changing alcohol-consumption trends, and some transportation-related borrowers. Wiedman said PNC has also been selective in financing AI infrastructure and data centers, favoring projects backed by high-credit-quality hyperscalers and strong contracts.

Loan, Deposit and Revenue Outlook

PNC reported strong loan growth in the first half of 2026, excluding the contribution from its FirstBank acquisition, which closed in January. Reilly said commercial lending continues to grow, although at a slower pace than during the first half and more in line with historical growth in a strong economy. Commercial real estate lending has returned to growth after a lengthy period of declines, he said.

On the consumer side, PNC is emphasizing credit cards as an opportunity to deepen customer relationships. Wiedman said the company believes it can at least double its penetration among existing customers relative to pure-play banks. PNC is less aggressively retaining originated mortgages on its balance sheet and is not currently emphasizing auto lending.

Reilly said spot deposits are growing faster than loans in the third quarter, driven primarily by commercial deposits. Deposit costs are expected to rise by about 5 basis points because of mix, he said, while the company expects deposit betas near their historical level of roughly 50% if rates increase.

PNC expects its net interest margin to exceed 3% by year-end. Reilly said the bank prioritizes total revenue, net interest income, earnings per share and return on assets over maximizing margin on individual loans. Lower-spread, high-credit-quality loans can generate additional capital-markets or treasury-management revenue, he said.

Fee Growth, AI and Expansion Strategy

Wiedman said fee-income opportunities include capital markets, debt and derivatives, Harris Williams M&A advisory services, treasury management and card products. Reilly said capital markets and Harris Williams are having record years, while card and cash-management businesses continue to grow. Mortgage-related fees remain flat, as expected.

The company also plans to maintain positive operating leverage while investing in technology, cards, international payments and expansion markets. Wiedman said PNC’s AI initiatives are focused on five major areas, including retail operations, commercial loan servicing and fraud.

In software development, PNC has implemented developer assistance tools that helped it deliver certain offerings about 40% more efficiently, Wiedman said. The company sees the potential for larger productivity gains as it expands the use of AI agents, while also emphasizing controls over cyber and operational risks. Reilly said PNC is increasingly developing AI capabilities in-house, including its own computing infrastructure and models, rather than relying solely on vendors.

PNC has committed to build 300 additional branches on top of its existing network of roughly 2,300 branches. Reilly said the company is targeting higher-growth markets where it has already established a presence and believes reaching approximately 7% branch market share can produce an “exponential lift” in business activity.

Wiedman said PNC opened about 25 branches last year and expects to open about 55 this year. He added that branch revenue has met or exceeded internal targets and that nearby branches make the company’s digital marketing more effective.

FirstBank Integration and Capital

Management said the FirstBank integration has progressed faster than anticipated. Reilly said PNC has met or exceeded the financial measures it expected when the deal was announced, while demand for products not previously offered by FirstBank, including commercial and asset-management services, has been strong in Colorado.

Reilly said PNC’s common equity tier 1 ratio of about 10% is appropriate currently. He expects the company could add roughly one percentage point of capital under expected Basel changes, though the bank would seek to work that level down through loan growth and, beyond that, capital returns.

PNC expects to exit 2026 with an approximately 18% return on tangible common equity, Reilly said. He added that organic growth remains sufficient for the company’s objectives, while potential acquisitions would face a high hurdle because current valuations are elevated and a major transaction could distract from PNC’s AI priorities.

About The PNC Financial Services Group (NYSE:PNC)

The PNC Financial Services Group, Inc is a diversified financial services company headquartered in Pittsburgh, Pennsylvania. Through PNC Bank and its other businesses, the company provides banking, lending, investment, and financial advisory services to individuals, small businesses, corporations, government entities, and institutional clients.

PNC's offerings include checking and savings accounts, consumer and commercial loans, residential mortgages, credit cards, treasury management, payment processing, and corporate banking services.

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