uploads///Loan book

PNC Financial Services Expands Commercial Lending


Jul. 18 2016, Updated 2:57 p.m. ET

Commercial lending expands

PNC Financial Services (PNC) engages in retail, corporate, and institutional banking. The diversified giant expanded its commercial lending in the first quarter of 2015 by 1% over the previous quarter, to $137 billion. The increase was mainly due to large customers in PNC’s corporate banking business and from growth in real estate loans.

In contrast, average consumer lending declined marginally by $0.3 billion. It came as a result of declines in the non-strategic portfolio of residential mortgage and brokered home equity loans. The overall loan book expanded by 1% quarter-over-quarter and year-over-year.

Some banks that are strong on the commercial lending front include JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C). JPMorgan Chase has a weight of 8.1% in the Financial Select Sector SPDR ETF (XLF).

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Strong liquidity position

PNC Financial had a loan-to-deposit ratio of around 84% on June 30, 2016, as growth in consumer deposits was more than offset by seasonally lower commercial deposits. The company saw a decline in its deposit base by $0.6 billion from the previous quarter to $249.8 billion. However, average deposits grew by $1.5 billion. This was due to higher demand deposits and savings deposits, and partially offset by lower money market deposits. This reflected a shift to new relationship-based savings products.

The total borrowed funds declined by $0.4 billion. The estimated liquidity coverage ratio exceeded 100% for both PNC and PNC Bank, where the requirement is 80% according to the new regulatory short-term liquidity standard. The standard became effective on January 1, 2015. The stronger liquidity position gives the bank enough room to expand its loan book, especially to corporates in the United States.


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