PITTSBURGH, June 25, 2020 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) announced today the
results of its biennial company-run stress test conducted in
accordance with regulations of the Board of Governors of the
Federal Reserve System (Federal Reserve) and the Office of the
Comptroller of the Currency (OCC) under the Dodd-Frank Wall Street
Reform and Consumer Protection Act. These company-run stress tests
are designed to help assess whether banking organizations have
sufficient capital to absorb losses and support operations during
hypothetical severely adverse economic conditions over a
nine-quarter projection period. The projection period for the 2020
test covers January 1, 2020 to
March 31, 2022.
"The results of the stress test confirm PNC's ability to
withstand the challenges of a severe economic environment, while
upholding our commitment to our customers, communities and
employees," said PNC Chairman, President and Chief Executive
Officer William S. Demchak.
"Additionally, the benefit from the recent sale of our equity
investment in BlackRock, which bolstered our capital position to
record levels, is not reflected in our estimated stress test
results. We are confident in our ability to navigate headwinds from
a position of financial strength with our strong balance sheet,
liquidity and capital flexibility."
Under the hypothetical severely adverse scenario provided by the
agencies, PNC estimates that its ending and minimum regulatory
capital ratios would be as follows:
Basel III
Regulatory Capital Ratios:
Common Equity Tier
1
Tier 1 Risk-Based
Capital
Total Risk-Based
Capital
Tier 1
Leverage
Supplementary
Leverage
|
Ending Q1
2022
8.2%
9.4%
11.8%
8.4%
6.9%
|
Minimum
8.0%
9.2%
11.5%
8.2%
6.7%
|
These results are the product of a forward-looking regulatory
exercise using hypothetical macroeconomic assumptions and,
as such, these results do not represent a forecast of PNC's
future capital levels or anticipated economic conditions. In
addition, these results do not reflect the benefits of PNC's
recent sale of its equity investment in BlackRock, Inc.
and the five-year transition period, which PNC has elected to
apply for incorporating the effects of the Current
Expected Credit Loss (CECL) standard into regulatory capital.
Together these items provide a material benefit to
PNC's regulatory capital ratios that is not included in the
projections as presented.
The supervisory severely adverse scenario for the 2020
company-run stress test was released by the Federal Reserve and OCC
in February 2020, before the onset of
the economic and financial stress caused by the novel coronavirus
pandemic. Nevertheless, the scenario includes a severe global
recession that is accompanied by both a period of heightened stress
in commercial real estate and corporate debt markets, as well as a
sharp drop in asset prices.
As required by applicable regulations, capital ratios are
calculated (a) for the first quarter of 2020 using the actual
capital actions expected to be undertaken in that quarter and (b)
for the remaining eight quarters of the stress period, assuming
that (i) there are no repurchases or redemptions of regulatory
capital instruments; (ii) there are no issuances of common stock or
preferred stock (other than equity issuances pursuant to expensed
employee compensation programs); (iii) the dollar amount of
quarterly common stock dividends is equal to the quarterly average
dollar amount of common stock dividends paid during the second,
third, and fourth quarters of 2019 and first quarter of 2020 (for
PNC, the quarterly average amount of common dividends during this
period was $490 million); and (iv)
payments on other regulatory capital instruments are made equal to
the stated dividend, interest, or principal due.
The Basel III risk-based ratios were determined using the
standardized approach for risk weights included in the Basel III
rules.
Results of PNC's company-run stress test, including PNC's
estimates of pre-provision net revenue, other revenue, loan and
other losses, net income before taxes, and regulatory capital
ratios for PNC, as well as additional information on the
methodologies used in conducting the stress test, may be found at
www.pnc.com/regulatorydisclosures.
The PNC Financial Services Group, Inc. is one of the largest
diversified financial services institutions in the United States, organized around its
customers and communities for strong relationships and local
delivery of retail and business banking including a full range of
lending products; specialized services for corporations and
government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit www.pnc.com.
CONTACTS
MEDIA:
PNC Media Relations
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE PNC Financial Services Group