(Reuters) – PNC Financial Services Group said on Friday it would reduce its workforce by about 4% as part of its cost reduction plans after it posted a drop in profit in the third quarter.
The lender said the job cuts would reduce its personnel expenses by about $325 mln, or 5%, annually.
Shares of the regional bank were up 0.5%, to $121.95, in premarket trade.
For the three months ended Sept. 30, PNC reported a decline in third-quarter revenue of 5.7%, to $5.23 billion, missing the street estimate of $5.32 billion.
Average deposits at Pittsburgh-based PNC were also down 3.8%, at $422.5 billion in the third quarter, compared to $439.2 billion for the same quarter last year.
The lender earned a profit of $1.57 billion, or $3.60 per share, compared to $1.64 billion, or $3.78 per share, from a year earlier. Analysts had estimated a profit of $3.11 per share, according to LSEG IBES data.
PNC set aside $129 million as provisions for credit losses, compared to $241 million a year earlier.
The Federal Reserve’s quantitative tightening, while boosting net interest income (NII) – the difference between what banks earn from lending and pay out on deposits – has also increased the odds of loan defaults. Banks have responded by allocating more capital to their rainy-day funds.
Some lenders have been cautioning about a weakness in NII growth as borrowing costs surge, dissuading customers from applying for loans, especially as the central bank keeps rates higher for longer.
The lender said it expects a drop of 1% to 2% for the fourth quarter in its net interest income (NII), compared to the current quarter this year. In the third quarter, it posted a drop of 1.6% in NII, to $3.4 billion, from the same quarter last year.
PNC’s banking division said earlier this month that it had purchased a portfolio of capital commitments from Signature Bridge Bank for $16.6 billion in an arrangement with the Federal Deposit Insurance Corp as receiver.
(Reporting by Jaiveer Shekhawat and Pritam Biswas in Bengaluru; Editing by Pooja Desai)
