Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — RBC Capital Markets Global Financial Institutions Conference 2024
18 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Mar 5, 2024
Slide 1: RBC Capital Markets Global Financial Institutions Conference
The PNC Financial Services Group RBC Capital Markets Global Financial Institutions Conference Gagan Singh, Chief Investment Officer March 5, 2024 Exhibit 99.1
Slide 2: Cautionary Statement Regarding Forward-Looking and non-GAAP Financial Information
Cautionary Statement Regarding Forward-Looking and non-GAAP Financial Information This presentation is not intended as a full business or financial review and should be viewed in the context of all of the information made available by PNC in its SEC filings and on our corporate website. The presenta
Slide 3: Agenda
Agenda 2 Economic outlook Fed and interest rate outlook PNC interest rate risk profile PNC and banking sector balance sheet trends
Slide 4: The U.S. economy performed surprisingly well in 2023 in the face of record tightening
The U.S. economy performed surprisingly well in 2023 in the face of record tightening in monetary policy 3 The economy expanded at a robust pace in 2023 despite one of the most rapid hiking cycles on record At the same time, inflation fell rapidly, led by easing rental inflation and falling good
Slide 5: Strong consumer balance sheets and asset price gains have cushioned the impact of higher interest rates
Strong consumer balance sheets and asset price gains have cushioned the impact of higher interest rates 4– Sources (top-left to bottom-right): FRB; Bloomberg; FRB; BEA/Freddie Mac – * 23Q4 Net Worth value forecasted 3.7% 6.6% 0% 2% 4% 6% 8% 10% 12% 1990 1995 2000 2005 2010 2015 2020 Effective Rate P
Slide 6: The outlook for policy rates is biased lower, but timing and magnitude remain uncertain
The outlook for policy rates is biased lower, but both the timing and magnitude remain highly uncertain 5 Monetary policy is restrictive and policy rates are likely to decline in 2024 Inflation has declined and is near the Fed’s target, giving room for the Fed to pivot on policy, although core s
Slide 7: Over the medium-term, PNC expects short rates to average in the 2.5%-3.5% range
Over the medium-term, PNC expects short rates to average in the 2.5%-3.5% range and term yields to be 75-100 bps higher than short rates 6– Sources (top-right to bottom-right): FRBNY/CBO; OBM/BEA; Bloomberg/PNC Rates fell to extremely low levels during the 2010-2020 period with weaker demographic
Slide 8: PNC's balance sheet has benefited from higher rates
PNC’s balance sheet has benefited from higher rates 7 – Sources (top-right to bottom-right): PNC/10Ks; PNC; PNC/10Ks – Data represents year-end points on top-right and bottom-right charts – NII represents net interest income; MVE represents market value of equity; LHS represents left hand side; RHS
Slide 9: PNC's balance sheet is currently neutral to rate changes
PNC’s balance sheet is currently neutral to rate changes, and we expect additional benefits from repricing our short-dated fixed-rate assets 8 PNC’s balance sheet is neutral to rate levels after being asset sensitive for many years However, we will benefit if the curve steepens from current hist
Slide 10: PNC securities and swap portfolio highlights
PNC securities and swap portfolio highlights 9 0 1 2 3 4 5 6 7 8 12/23 12/24 12/25 $bn Projected PNC AOCI Accretion Securities Swaps 47% Burn Down by Year-End 2025 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 2018 2019 2020 2021 2022 2023 2024 2025 $bn Realized Income Projected Income Com
Slide 11: Aggregate liquidity in the financial system has declined sharply over the past two years
Aggregate liquidity in the financial system has declined sharply over the past two years and we expect the Fed to start tapering around mid-year 10 Aggregate liquidity in the financial system has been steadily declining from record high levels due to reduction in the Fed SOMA holdings Reserve le
Slide 12: U.S. commercial banking sector trends
U.S. commercial banking sector trends 11 15% 17% 19% 21% 23% 25% 27% 29% 31% 33% 1984 1990 1996 2002 2008 2014 2020 NIB Deposits as % of Total Deposits 4% 6% 8% 10% 12% 14% 2018 2019 2020 2021 2022 2023 Borrowings as a % of Total Assets 0% 10% 20% 30% 40% 50% 60% 70% 80% Cumulative Deposit Betas in
Slide 13: PNC has a high-quality and well diversified deposit base
PNC has a high-quality and well diversified deposit base 12 PNC deposit balances and pricing have been consistent with our expectations PNC was quick to recognize that the COVID fiscal and monetary response led to significant “surge” deposit creation that was likely to be temporary The deposit
Slide 14: While funding pressure and capital headwinds persist, PNC is well-positioned versus peers
While funding pressure and capital headwinds persist, PNC is well- positioned versus peers 13 – Sources (top-left to bottom-right): Bloomberg; indicative quotes from dealers based on secondary market offerings; Barclays; FRB – 5yr Debt Spreads to UST Large Cap Financial Institutions include the Peer
Slide 15: Summary
Summary 14 Despite significant monetary policy headwinds, the U.S. economy performed well in 2023, defying recession forecasts Inflation declined sharply, driven by shelter and goods prices; services inflation has proven to be sticky and has stayed stubbornly high The economic outlook for 2024
Slide 16: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information 15 This presentation includes “snapshot” information about PNC used by way of illustration and is not intended as a full business or financial review. It should not be viewed in isolation but rather in the context of all of the information m
Slide 17: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information 16 Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently expecting and do not take into account potential legal and regula
Slide 18: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information 17 Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of systems and controls, third-party insurance, derivati