Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q4 2018 Earnings Presentation
24 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Jan 16, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call
Exhibit 99.2 Fourth Quarter 2018 Earnings Conference Call January 16, 2019 The PNC Financial Services Group
Slide 2: Cautionary Statement Regarding Forward-Looking and Non-GAAP Financial Information
Cautionary Statement Regarding Forward-Looking and Non-GAAP Financial Information Our earnings conference call 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 its corpora
Slide 3: 2018 Highlights
2018 Highlights Net Income . Delivered strong results $5.3 billion − Grew total revenue Diluted Earnings Per Share − Expanded net interest margin − Generated positive operating leverage $10.71 − Grew loans and deposits Return on Average Assets − Maintained strong credit quality 1.41% − Expanded our
Slide 4: Balance Sheet: Grew Loans, Deposits and Securities
Balance Sheet: Grew Loans, Deposits and Securities Change vs. Average balances, $ billions 4Q18 3Q18 4Q17 Highlights Commercial lending $152.2 $2.3 $3.7 Consumer lending 73.7 0.3 1.1 Total loans $225.9 $2.6 $4.8 . Growth in commercial and consumer lending Investment securities $82.1 $1.4 $7.9 . 11%
Slide 5: Balance Sheet: Grew Loans and Deposits
Balance Sheet: Grew Loans and Deposits Loans Deposits 2% Year-Over-Year Quarter Loan Growth 2% Year-Over-Year Quarter Deposit Growth $261.5 $262.5 $266.5 $223.3 $225.9 $221.1 $181.3 $186.3 $191.2 $152.2 $148.5 $149.9 0.87% 0.71% 4.49% 4.36% 0.42% 3.91% Averagebalances,$ billions Averagebalances,$ bi
Slide 6: Income Statement: Record Full Year 2018 Revenue
Income Statement: Record Full Year 2018 Revenue Change Change vs. vs. $ millions FY18 FY17 4Q18 3Q18 Highlights Net interest income $9,721 $613 $2,481 $15 . Record net interest income in 2018 . 4Q18 reflects $47 million lower earnings from BlackRock, Fee income 6,206 62 1,534 (56) including PNC’s $1
Slide 7: Income Statement: Strong Growth in Net Interest Income
Income Statement: Strong Growth in Net Interest Income Net Interest Income Highlights 7% Year-Over-Year Growth . Record net interest income in 2018 $9,721 $9,108 − Increase of $613 million or 7% over 2017 $8,278 $8,391 − Higher earning assets yields and balances, partially offset by higher funding c
Slide 8: Income Statement: Strong Growth in Noninterest Income
Income Statement: Strong Growth in Noninterest Income Noninterest Income Noninterest Income Detail 3% Year-Over-Year Growth Record Fee Income in 2018 Change Change $7,411 vs. vs. $7,221 $ millions FY18 FY17 4Q18 3Q18 $6,947 Asset management $1,825 ($117) $428 ($58) $6,771 Consumer services 1,502 87
Slide 9: Income Statement: Focused on Expense Management
Income Statement: Focused on Expense Management Noninterest Expense Noninterest Expense Detail Improving Efficiency Change Change vs. vs. $10,398 $10,296 $ millions FY18 FY17 4Q18 3Q18 $9,463 $9,476 Personnel $5,471 $203 $1,348 ($65) 64% Occupancy 818 (50) 202 7 62% 62% 60% Equipment 1,103 38 285 21
Slide 10: Credit Quality: Remains Strong
Credit Quality: Remains Strong Net Charge-offs and Provision NCO / Average Loans for 4Q18: 0.19% $441 $457 $420 $408 $148 $125 $ millions$ $123 $113 $109 $107 $92 $91 $80 $88 4Q17 1Q18 2Q18 3Q18 4Q18 FY17 FY18 Net Charge-offs Provision Nonperforming Loans Delinquencies $2,510 $1,946 $2,126 $2,144 $1
Slide 11: Outlook: Full Year 2019 Compared to Full Year 2018
Outlook: Full Year 2019 Compared to Full Year 2018 Balance Average loans Up 3% - 4% Sheet Revenue Up higher end of low-single digits Income Noninterest expense Up lower end of low-single digits Statement Effective tax rate Approximately 17% Positioned to deliver positive operating leverage − Refer t
Slide 12: Outlook: First Quarter 2019 Compared to Fourth Quarter 2018
Outlook: First Quarter 2019 Compared to Fourth Quarter 2018 Balance Average loans Stable Sheet Net interest income Stable Fee income Down low-single digits Income Other noninterest income $275 - $325 million Statement Noninterest expense Stable Loan loss provision $125 - $175 million − Refer to Caut
Slide 13: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information 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 inform
Slide 14: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information . 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
Slide 15: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information . 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, d
Slide 16: Basel III Regulatory Capital Ratios
Appendix: Basel III Regulatory Capital Ratios Because PNC remains in the parallel run qualification phase for the advanced approaches, PNC’s regulatory risk-based capital ratios in 2018 and 2017 are calculated using the standardized approach for determining risk-weighted assets. Under the standardiz
Slide 17: Basel III Regulatory Capital Ratios
Appendix: Basel III Regulatory Capital Ratios Basel III Common Equity Tier 1 Capital Ratios Fully Phased-In Basel III 2017 Transitional (b) Basel III (a) (Non-GAAP) Basel III Dec. 31, Sep. 30, Dec. 31, Dec. 31, $ millions 2018 2018 2017 2017 (estimated) Common stock, related surplus, and retained ea
Slide 18: Non-GAAP to GAAP Reconciliation: Fee Income
Appendix: Non-GAAP to GAAP Reconciliation Fee Income (Non-GAAP) For the year ended For the three months ended % Change Change Dec.31, Dec.31, 2018 vs. Dec. 31, Sep. 30, 4Q18 vs. $ millions 2018 2017 2017 2018 2018 3Q18 Asset management $1,825 $1,942 (6%) $428 $486 (12%) Consumer services 1,502 1,415
Slide 19: Non-GAAP to GAAP Reconciliation: Return on Tangible Common Equity
Appendix: Non-GAAP to GAAP Reconciliation Return on Tangible Common Equity (Non-GAAP) For the year ended For the three months ended Dec. 31, Dec. 31, Dec. 31, Sep. 30, $ millions 2018 2017 2018 2018 Return on average common shareholders' equity 11.83% 12.09% 11.83% 12.32% Average common shareholders
Slide 20: Non-GAAP to GAAP Reconciliation: Tangible Book Value per Common Share
Appendix: Non-GAAP to GAAP Reconciliation Tangible Book Value per Common Share (Non-GAAP) % Change 12/31/18 12/31/18 $ millions, except per share data Dec. 31, Sep. 30, Dec. 31, vs. vs. 2018 2018 2017 9/30/18 12/31/17 Book value per common share $95.72 $93.22 $91.94 3% 4% Tangible book value per com
Slide 21: Non-GAAP to GAAP Reconciliation: Pretax, Pre-Provision Earnings
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (Non-GAAP) For the year ended For the three months ended % Change % Change Dec. 31, Dec. 31, 2018 vs. Dec. 31, Sep. 30, 4Q18 vs. $ millions 2018 2017 2017 2018 2018 3Q18 Net interest income $9,721 $9,108 7% $2,481 $2,466 1% Non
Slide 22: Other Noninterest Income: Net Visa Activity
Appendix: Other Noninterest Income Net Visa Activity For the three months ended Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, $ millions 2018 2018 2018 2018 2017 Gains on Visa Sales $ - $ - $ - $ - $ - Derivative Fair Value Adjustments (a) 42 (32) 27 (2) (248) Net Visa Activity $ 42 $ (32) $ 27 $ (2)
Slide 23: 2017 Impact of Tax Legislation and Significant Items
Appendix: 2017 Impact of Tax Legislation and Significant Items 2017 Adjustments for Tax Legislation and Significant Items Tax Legislation Significant Items Flow Visa Employee 2017 Through RMSR Fair Value PNC Real Estate Pension Total 2017 Reported Total Tax impact of Fair Value Derivative Foundation
Slide 24: 4Q17 Impact of Tax Legislation and Significant Items
Appendix: 4Q17 Impact of Tax Legislation and Significant Items 4Q17 Adjustments for Tax Legislation and Significant Items Tax Legislation Significant Items Flow Visa Employee 4Q17 Through RMSR Fair Value PNC Real Estate Pension Total 4Q17 Reported Total Tax impact of Fair Value Derivative Foundation
PNC Financial Services Group — Q4 2018 Earnings Presentation on 6ix