PNC Leverages Technology to Help Clients Manage Uncertainty

PNC Financial Services Group is leveraging technology and its other strengths as it helps clients manage the uncertainty caused by tariffs, executives said Tuesday (April 15) during the bank’s quarterly earnings call.

With this uncertainty roiling the markets and raising concerns of a potential recession, PNC is monitoring and evaluating the situation and communicating with its clients about how these events my impact their businesses, William S. Demchak, chairman, president and CEO of PNC, said during the call.

“We have demonstrated time and time again that we will perform well in periods of uncertainty,” Demchak said. “The foundation of our success has been built upon the strength of our balance sheet, client selection, our interest rate risk positioning, our diversified business mix, leading technology and our people — and that has not changed.”

PNC had a strong first quarter, gaining customers and commercial loans, expanding its net interest margin and capital levels, and maintaining solid credit quality metrics, Demchak said in a Tuesday earnings release.

During the call, Demchak highlighted the bank’s increased commercial and industrial (C&I) loan commitments and spot balances.

C&I loan commitments increased by $4.7 billion during a quarter in which consumer loans declined by $1.0 billion and commercial real estate (CRE) loans decreased by $1.3 billion, according to a presentation released Tuesday in conjunction with the earnings call.

Spot utilization in the commercial and industrial banking (C&IB) business increased by about 80 basis points during the quarter, per the release.

When an analyst asked during the call if this growth could have been driven by businesses building up their inventory ahead of tariffs, PNC Chief Financial Officer Robert Q. Reilly said the growth was broad-based across most loan categories and was expected.

“We have been calling for this for some time in terms of increased utilization, which we saw in the quarter, so that tracks to what we thought at the beginning of the year,” Reilly said. “As far as some of this being defensive or tariff-driven, it’s hard to say. It’s not all of it, for sure. Maybe there’s a little bit of it in there.”

Reilly said during the call that PNC has not changed its guidance because the current environment is too fluid for the bank to do so. He said the proposed tariffs announced April 2 were “more severe than anticipated” and that if they remain in effect for an extended period, “it’s quite possible the probability of a recession will go up.”

Reilly added that the bank had a solid first quarter and is well positioned for the rest of the year.

Demchak said during the call: “We’re growing just fine. We have lots of capital and ability to support our clients, and we’re likely going into an environment where being a bank is a pretty important thing for the U.S. economy, and we’ll take advantage of that.”