* Q3 EPS $1.64 vs $1.55 year earlier
* Net income rises 11 percent
* Books $137 mln pre-tax gain on Visa share sale
* Loan growth slows
Oct 16 (Reuters) - PNC Financial Services Group Inc’s quarterly profit rose 11 percent, boosted by the sale of a portion of its stake in card network Visa Inc, but loan growth slowed.
Total loans at PNC grew just $1.5 billion to $182 billion, the slowest pace of growth in five quarters. Commercial lending increased $1.1 billion, the lowest growth in seven quarters.
U.S. banks have struggled with lacklustre loan growth as a weak economy, high unemployment and uncertainty over Europe’s debt crisis dampens credit demand.
However, residential mortgage lending was one of the bright spots for PNC, which operates mainly in Pennsylvania, Virginia, Missouri, Wisconsin and Georgia.
Income from home loans rose 15 percent from a year earlier as it made more loans.
Analysts expect mortgage lending volume to continue to rise after the Federal Reserve said in September that it would buy up to $40 billion of mortgage bonds every month until the labor market improved materially.
JPMorgan Chase & Co and Wells Fargo & Co both posted record quarterly profits last week, on the back of improving mortgage market.
PNC also set aside just $37 million to cover possible mortgage repurchase requests in the third quarter, a sharp decline from the $438 million it set aside in the second quarter, signaling that demands for put-backs may be ebbing.
Government-backed mortgage financiers Fannie Mae and Freddie Mac have been pressing U.S. banks to buy back soured home loans made during the housing boom.
The loans had been bundled into mortgage-backed securities and bought by outside investors, who now allege they do not meet guarantees made by the banks when they were sold.
The bank’s net income rose to $925 million, or $1.64 per share, in the third quarter from $834 million, or $1.55 per share, a year earlier.
Pittsburgh-based PNC sold 5 million Visa Class B common shares in the quarter, resulting in a pre-tax gain of $137 million.
PNC, one of the 10 largest banks in the United States, still owns about 18 million Visa Class B shares with a fair value of about $1 billion, as of Sept. 30.
PNC shares were down 1 percent in trading before the bell. They closed at $62.93 on Monday on the New York Stock Exchange.
They have risen about 9 percent this year, trailing KBW bank index, which has risen about 28 percent in the same period.