Loan book expands
PNC Financial Services (PNC) provides banking services to retail, corporate, and institutional clients. In 4Q16, the diversified giant expanded its average commercial lending by 1% (or $1.7 billion) quarter-over-quarter to $138.1 billion. The rise came mainly from PNC Financial’s corporate banking and real estate business.
On the other hand, average consumer lending rose marginally by $0.3 billion in 4Q16. The rise came mainly due to growth in auto, residential mortgage, and credit card loans. This growth was partially offset by lower home equity and education loans, reflecting runoff portfolios. PNC has seen stable credit quality, with no change in its $2.4 billion in non-performing assets on a sequential basis.
Some of PNC’s competitor banks, which are are strong on the commercial lending front, include Bank of America (BAC), JPMorgan Chase (JPM), and Citigroup (C). JPMorgan Chase has a weight of 8.2% in the Financial Select Sector SPDR ETF (XLF).
Strong liquidity position
PNC Financial had a loan-to-deposit ratio of ~82% on December 31, 2016. PNC’s average deposit rose 2%, or $4.5 billion, in 4Q16, mainly due to higher commercial deposits and growth in its savings products.
As of December 31, 2016, PNC’s deposits had fallen 1% to $257.2 billion sequentially. However, its deposits had risen 3% year-over-year, reflecting a shift from money market deposits to relationship-based savings products. The company’s consumer space continued to maintain deposit growth, partially offset by fewer commercial deposits. On December 31, 2016, the estimated liquidity coverage ratio exceeded 100% for both PNC and PNC Bank, higher than the minimum phased-in requirement of 90%.
In the next part of the series, we’ll study PNC’s non-interest income in 4Q16.