April 13, 2018 / 11:09 AM / 3 months ago

UPDATE 4-PNC forecasts modest loan growth in Q2, shares fall

* CEO sees real estate market tightening

* Posts in-line first quarter profit

* Shares fall 3 pct; biggest pct loser on S&P 500 Financial (Adds analyst comments,)

By Parikshit Mishra

April 13 (Reuters) - U.S. regional lender PNC Financial Services Group Inc on Friday forecast modest loan growth and a rise in loan loss provision for the second quarter, sending its shares down more than 4 percent.

After PNC reported first-quarter profit broadly in line with analysts’ estimates, the guidance by Chief Financial Officer Robert Rilley pushed shares to a more than three-month low.

The broader market and the S&P 500 financial sector index were both lower, weighed down by quarterly results from JPMorgan Chase Co, Wells Fargo & Co and Citigroup Inc.

Chief Executive Bill Demchak said on a post-earnings call he expects real estate markets to tighten, leading to slower loan growth in the business.

“The combination of rising business optimism and lower corporate tax rates has raised the bar in terms of loan growth expectations,” Edward Jones analyst Kyle Sander said.

PNC Financial forecast second-quarter provision for loan losses to be between $100 million and $150 million. This follows a 4.5 percent rise in loan loss provision to $92 million in the first quarter.

The higher provision and a 5 percent jump in expenses offset gains from higher interest income and pushed PNC Financial to report an in-line profit for the three months ended March 31.

The Pittsburgh-based bank, among the United States’ largest local lenders by assets, had beaten analysts’ profit estimates for the past seven quarters.

The company reported earnings per share of $2.43, in line with analysts’ average estimate, according to Thomson Reuters I/B/E/S.

PNC Financial, which owns a minority stake in BlackRock Inc , said its loan portfolio grew 4 percent in the first quarter, with commercial lending expanding 6 percent.

Net interest income rose 9 percent to $2.37 billion. (Reporting by Parikshit Mishra in Bengaluru; Editing by Sriraj Kalluvila)

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