The PNC Financial Services Group, Inc. (NYSE:PNC.PRQ) Q4 2016 Earnings Conference Call - Final Transcript

Jan 13, 2017 • 11:00 am ET


The PNC Financial Services Group, Inc. (NYSE:PNC.PRQ) Q4 2016 Earnings Conference Call - Final Transcript


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Good morning. My name is Nelson and I will be your conference operator today. At this time, I would like to welcome everyone to the PNC Financial Services Group earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded.

I will now turn the call over to Director of Investor Relations, Mr. Bryan Gill. Please go ahead, sir.

Bryan Gill

Okay, thank you, Nelson, and good morning. Welcome to today's conference call for the PNC Financial Services Group. Participating on the call are PNC's Chairman, President and Chief Executive Officer, Bill Demchak, and Rob Reilly, Executive Vice President and Chief Financial Officer.

(Forward-Looking Cautionary Statements) Now I'd like to turn the call over to Bill Demchak.

Bill Demchak

Thanks, Bryan. Good morning, everybody. As you've seen today, we reported full-year 2016 results with net income of $4 billion or $7.30 per diluted common share. You should have also seen our tangible book value at year-and was $67.41 per common share. All in, 2016 was a pretty solid year for PNC. We grew net interest and fee income. We kept expenses essentially flat and we returned more than $3 billion in capital to shareholders. And, importantly, we grew our customer franchise.

Now all that said, our net income finished slightly below 2015 in part due to our disciplined risk management efforts throughout the year to best position PNC in the current credit and interest rate environment. As we've learned over and over again through time, our business offers very attractive returns and growth opportunities by effectively managing through the cycles that are inherent to the banking industry. In our view for the most part in 2016, neither the credit and certainly not the rate markets offered us an attractive risk reward opportunity. So we maintained higher-than-usual cash balances and our loan growth trailed peers.

Now as I discussed in depth at a number of investor conferences in the last few months, we continue to invest and make important progress against our strategic priorities. We are particularly pleased with the progress that we've made on modernizing our core technology infrastructure and building a leading banking franchise in the Southeast. As we look ahead, current indicators suggest improving confidence amongst consumers and business leaders about the direction of the economy, which could bode well for our industry. There is also growing sentiment that we're entering a period of rising interest rates.

In addition, we've all heard that the new administration in Washington supports tax reform, regulatory relief and other pro-growth policies. But, so far, a move in interest rates is the only thing that has actually happened with the apparent likelihood of more of this to come this year. But should some or all of these things come to pass, it would certainly benefit us and the industry as a whole.

Now, as always, though, we remain focused on the things that are