PNC Financial Services Group remains “stable,” following a recent announcement of layoffs and other cuts to expenses, according to credit analyst group Fitch Ratings.
An issuer default rating is an assessment of how vulnerable an institution is to defaulting on financial obligations. Fitch Ratings held the bank’s long-term and short-term issuer default ratings at A+/F1.
PNC has been evaluating its expenses, and last week announced it would cut 4% of its workforce as part of a larger plan to reduce costs.
The ratings agency said the outlook is stable on long-term income-driven repayment (IDR). It said the assessment “reflects their solid operating performance” as well as their integration of the U.S. subsidiary of Spain’s BBVA bank, which PNC acquired in 2020 for $11.6 billion. Integrating the new business was completed last year.
Fitch said on Monday PNC has a “diverse and growing business profile that will continue to support consistent results, despite Fitch’s reduction of the operating environment score for U.S. banks to ‘aa-’ from ‘aa’.
The agency “views PNC’s franchise as strong given its national and diversified business mix, solid deposit base and steady non-interest income,” Fitch said, adding that it views the bank’s “risk profile as generally superior to most banks in its peer group given its robust risk controls and underwriting standards, which supports the bank’s relatively high ratings.”
PNC is embarking on a plan to cut more than $725 million in expenses, CEO Bill Demchak told analysts last week during the company’s third quarter earnings call.
That move includes layoffs, which is part of a plan to cut costs by $325 million in 2024. It is maintaining its annual continuous improvement program, which is targeting a separate $450 million. The money from that program typically is reinvested in the company, executives said.
PNC is the sixth largest bank by deposit market share at 2.5% as of the second quarter. It’s the fourth largest by branch count with 2,512 branches.
