(Bloomberg) — The two biggest regional banks gave muted predictions for net interest income in the first quarter, amid uncertainty over how lower interest rates will revive lending demand.
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PNC Financial Services Group Inc. predicted first quarter NII will decline 2% to 3% on a sequential basis, amid expectations that loan growth also falls. U.S. Bancorp forecast NII would be “relatively stable” in the same period, according to a statement Thursday.
The cloudier predictions come as regional banks grapple with sluggish loan growth and heightened competition for deposits as rates decline. Still, the banks were more optimistic for the full year, with Pittsburgh-based PNC saying total revenue will rise by about 6%. Minneapolis-based U.S. Bancorp said it expects total net revenue to rise between 3% and 5%.
Shares in both banks were down in early New York trading on Thursday. PNC fell about 3.7% while U.S. Bancorp was down about 2.8%.
“We are well positioned to deliver industry-leading returns on tangible common equity and remain confident in our strategy for future growth and our ability to deliver meaningful positive operating leverage,” Andy Cecere, chief executive officer at U.S. Bancorp, said in the statement Thursday.
U.S. Bancorp reported fourth-quarter NII of $4.18 billion, which was slightly ahead of expectations. At PNC, NII was $3.52 billion, also topping an analyst forecast of $3.47 billion.
As the sixth largest bank in the US by total assets, PNC has been candid about its aspiration to grow, and has announced the plan to invest $1.5 billion to open new branches and renovating standing ones. Chief Executive Officer William Demchak has envisioned PNC as a “natural player” in the industry consolidation because banks benefit from the economies of scale.
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