Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — BancAnalysts Association of Boston Conference 2019
22 slides from Pnc Financial Services Group, Inc. (the)'s conference presentation, Nov 7, 2019
Slide 1: BancAnalysts Association of Boston Conference
Exhibit 99.1 BancAnalysts Association of Boston Conference November 7, 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 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 present
Slide 3: Progress on Our Strategic Priorities
Progress on Our Strategic Priorities Designed to create long-term value Expanding our leading banking franchise to new markets and digital platforms Deepening customer relationships by delivering a superior banking experience and financial solutions Leveraging technology to innovate and enhance prod
Slide 4: Highlights for Year to Date September 30, 2019
Highlights for Year to Date September 30, 2019 . Delivered high quality results while investing to Total Revenue create long-term shareholder value +3% . Compared to the same period a year ago: Noninterest Expense − Grew revenue +1% − Controlled expenses Efficiency − Grew loans and deposits 59% − Ma
Slide 5: Outlook: Fourth Quarter 2019 Compared to Third Quarter 2019
Outlook: Fourth Quarter 2019 Compared to Third Quarter 2019 Balance Average loans Up approximately 1% Sheet Net interest income Down approximately 1% Fee income Stable to up 1% Income Other noninterest income $300 - $350 million Statement Noninterest expense Up approximately 1% Loan loss provision $
Slide 6: Balance Sheet Trends and Interest Rate Risk Management
Balance Sheet Trends and Interest Rate Risk Management Gagan Singh, Chief Investment Officer The PNC Financial Services Group
Slide 7: Agenda
Agenda . Balance sheet trends . Approach to interest rate risk management and outlook for interest rates . Securities portfolio trends 7
Slide 8: Balance Sheet Trends
Balance Sheet Trends $ billions 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 9/30/19 CAGR Commercial lending $128.4 $133.5 $137.9 $147.4 $152.3 $160.2 4.8% Consumer lending 76.4 73.2 72.9 73.0 74.0 77.2 0.2% Total loans $204.8 $206.7 $210.8 $220.5 $226.2 $237.4 3.2% Investment securities $55.8 $70.5
Slide 9: Interest Rate (IR) Risk
Interest Rate (IR) Risk . Sensitivity of income and equity value to changes in the interest rate environment . Arises when index, maturity and cash flows of the assets does not match those of the liabilities . Measured by net interest income sensitivities and changes in the economic value of equity
Slide 10: Disciplined Approach to Balance Sheet Interest Rate Risk Management
Disciplined Approach to Balance Sheet Interest Rate Risk Management NII Sensitivity . Use the balance sheet holistically to manage IR risk 6% . Interest rate swaps and securities are the primary tools to mitigate 5% duration mismatches 4% 3% – Primarily use fixed rate swaps to alter floating rate lo
Slide 11: Over the Past Three Decades Interest Rates Have Continued to Decline Sharply Across the Curve
Over the Past Three Decades Interest Rates Have Continued to Decline Sharply Across the Curve 14% YoY Nominal GDP Growth vs. 5yr UST . Five year US Treasury rates through the cycle have averaged about 200 12% bps lower than pre-crisis levels, and 400 bps lower than the 1990s YoY Nominal GDP Growth 5
Slide 12: Decline in the Neutral Level of Short Rates Primarily Reflects Decline in Potential GDP Expectations
Decline in the Neutral Level of Short Rates Primarily Reflects the Decline in Potential GDP Expectations Growth in Labor Force Has Slowed . Real GDP growth and estimates for potential GDP growth have sharply Due to Changing Demographics declined 2.0% . This decline reflects a variety of structural f
Slide 13: Term Premium has also Declined Sharply Over the Past Several Years
Term Premium has also Declined Sharply Over the Past Several Years Due to a Number of Factors PCE Price Index . Declining inflation rates have pressured long-end yields lower Year Over Year Change (Annual) − Inflation volatility has also declined tremendously over the past two 14% decades which redu
Slide 14: Outlook for Rates Heavily Dependent on Whether a Recession Occurs
Outlook for Rates Heavily Dependent on Whether a Recession Occurs . Recession onset is accompanied by a very sharp decline in rates Recession and Mid-Cycle Adjustment Summaries – On average, Treasury yields decline 400 to 500 bps Peak Level (%) Peak-to-Trough Change (%) Fed Funds Fed Funds 5yr UST –
Slide 15: PNC's Investment Portfolio is Highly Liquid and Well Diversified
PNC’s Investment Portfolio is Highly Liquid and Well Diversified Securities Portfolio Snapshot September 30, 2019 . PNC’s investment portfolio is highly liquid and well diversified with low credit risk UST and Agency, 21.2% . PNC takes a value-driven, total return approach Agency RMBS, 57.4% Agency
Slide 16: Securities Portfolio Trends
Securities Portfolio Trends Government and Agency Holdings Private Label Holdings as a % of PNC’s Securities Portfolio as a % of PNC’s Securities Portfolio 100% 50% 44% Agency RMBS & CMBS UST & Agency 81% 82% 41% 42% 41% 76% 40% 39% 80% 71% 40% 68% 32% 56% 60% 61% 59% 58% 59% 29% 60% 30% 24% 19% 18%
Slide 17: Summary
Summary . PNC takes a disciplined approach to interest rate risk management . PNC has reduced asset sensitivity of the balance sheet over the past few years via adding fixed rate securities and swaps . Long-term secular forces such as an aging population, declining productivity and declining inflati
Slide 18: Appendix: 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 19: Appendix: 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 20: Appendix: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information − Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with governmental agencies. − Impact on business and operating results of any costs associated with obtain
Slide 21: Appendix: Peer Group of Banks
Appendix: Peer Group of Banks The PNC Financial Services Group, Inc. PNC BB&T Corporation BBT Bank of America Corporation BAC Capital One Financial Corporation COF Citizens Financial Group, Inc. CFG Fifth Third Bancorp FITB JPMorgan Chase & Co. JPM KeyCorp KEY M&T Bank Corporation MTB Regions Financ
Slide 22: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Fee Income (Non-GAAP) For the three months ended For the nine months ended % Change % Change Sep. 30, Jun. 30, Sep.30, 3Q19 vs. 3Q19 vs. Sep.30, Sep.30, YTD'19 vs. $ millions 2019 2019 2018 2Q19 3Q18 2019 2018 YTD'18 Asset management $464 $445 $486 4% (5%) $
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