PNC’s Payout Ratio Is Expected to Be High in 2017
PNC Financial Services (PNC) is expanding its balance sheet on the back of new assets and expanding offerings.
PNC Financial Services (PNC) manages both diversified banking operations and financial services divisions.
PNC Financial’s non-interest income for 3Q16 rose $167 billion compared to 3Q15. Sequentially, the company’s income rose $8 million.
PNC Financial Services (PNC) engages in corporate, retail, and institutional banking. The diversified giant expanded its commercial lending to $138 billion in 3Q16.
PNC Financial Services (PNC) is expected to post earnings per share (or EPS) of $1.84 in 4Q16, lower than its EPS of $1.87 in 4Q15 and in line with its EPS in 2Q16.
In 4Q16, Blackstone Group (BX) and Apollo Global Management (APO) are expected to report EPS (earnings per share) of $0.62 and $0.41, respectively.
Alternatives have historically paid 40%–60% of their earnings in dividends. Their earnings have improved in recent quarters, and payouts have increased sequentially.
Blackstone’s stock has risen 8.7% over the past month. It’s fallen 3.8% over the past year, reflecting a rise in recent months due to improved operating performance.
Equities and broader markets rebounded in 2H16. The global economic outlook has now become relatively more stable for 2017.
Energy prices (USO) saw a 45% rise in 2016 as OPEC and Russia struggled through excess inventories and entered into an agreement for an output freeze.
The credit market saw distressed pricing in 2H15 on lower bond pricing, mainly due to oil prices (USO) and interest rates.
In 2016, alternative asset managers saw higher exits and investments on the back of improved liquidity. The trend is expected to continue in 2017.
Alternative asset managers (IYF) have seen portfolio appreciations in the range of 3%–5% over the past couple of quarters, mainly due to improving fundamentals.
Alternative managers’ private equity divisions are expected to see improved performances in 2017 on higher liquidity and growth in sectors such as renewables and services.
Alternative asset managers such as Blackstone Group, KKR & Co., and The Carlyle Group saw improved performances in 2H16 on improved broader markets and rising holdings valuations.
Prospect Capital (PSEC) stock rose 3.0% over the past three months and 20.0% over the past year. The company is currently trading 5.0% below its 52-week high.
Prospect Capital (PSEC) has deployed money for equity investments and majority stake when there’s an opportunity for an investment in growing businesses.
Since the Fed increased interest rates in December 2016, Prospect Capital (PSEC) could see some pressure on its cost of capital in 2017.
Prospect has had an average ROE (return on equity) of 9.5% over the past five years compared to the industry average of 7.3%.
Closed-end funds have seen lower originations over the past few quarters on increased competition for deployment of funds in quality paper offerings.