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By Arasu Kannagi Basil
April 15 (Reuters) - U.S. bank PNC Financial raised its annual interest income forecast on Wednesday after recording better-than-expected loan growth in the first quarter, as lower interest rates encouraged more borrowing by customers.
Organic loan growth jumped to a three-year high during the quarter, CEO Bill Demchak told analysts.
PNC now expects net interest income, the difference between what a bank earns on loans and pays out on deposits, to rise about 14.5% in 2026, compared with its prior forecast of 14%.
Annual average loan growth is expected at roughly 11%, compared with the bank’s earlier forecast of 8%.
The U.S. Federal Reserve cut interest rates three times in the second half of last year, bringing the policy rate down by a cumulative 75 basis points.
In the first quarter of 2026, ended March 31, PNC’s net interest income jumped 14% from a year earlier to $3.96 billion, benefiting from its acquisition of regional lender FirstBank, strong loan growth and lower deposit costs.
PNC had finalized the $4.1 billion FirstBank acquisition in January, adding $26 billion in assets and strengthening its presence in Colorado and Arizona.
Quarterly profit was $1.77 billion, or $4.13 per share, up from $1.50 billion, or $3.51 per share, a year earlier.
Shares of the Pittsburgh, Pennsylvania-based bank were up 1% after the results, adding to a roughly 6% increase this year as of last close.
NON-BANK LENDING IN FOCUS
Demchak also told analysts the bank did not foresee "any exposure to a systemic event" linked to private credit.
Banking exposure to so-called non-depository financial institutions (NDFIs) has attracted increased attention in recent months, after the high-profile bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor last year raised concerns around credit quality.
"Importantly, the bulk of our loans actually have nothing to do with private credit, despite the regulatory category in which they reside," Demchak said.
PNC has extended $73 billion in loans to NDFIs, of which $7 billion is to private-credit providers, according to its presentation.