The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2022 Earnings Call Transcript

Bill Demchak: Yes.

Rob Reilly: Yes.

Operator: Our next question is from the line of Vivek Juneja with JPMorgan. Please go ahead.

Vivek Juneja: Just a couple of quick ones. Any color on criticized assets, how they did? How those did in the quarter?

Rob Reilly: Yes, relatively flat, not a big change at all.

Vivek Juneja: And Bill, just not to beat a dead horse to death, but the whole sort of question on NII and swaps and protection, given that you think of swaps and securities sort of synonymous later in terms of expressing your view on rates. I would expect that you’re going to hold off, therefore, even on the swap side in terms of adding protection yet until you see clear signs of a lot more potential for rate cuts?

Bill Demchak: Yes. It’s — I mean it’s strange to me Vivek, you’re a bit of a fixed income guy, this notion of protection, I mean, what a lot of banks are doing is they’ll put on forward starting swaps and they’ll not have to eat negative carry in the course of doing that. And they’ll hope sometime by the time those come due that there is a negative carry because there’ll be a cut. So, you effectively — I mean everything is priced at the forward curve when they do that trade. It makes no sense to me. It’s the same as choosing to invest at the moment on where the yield curve is. That’s my downside protection. I can buy — we can sell it, we can use options and sell away upside and buy some downside protection. As a practical matter, we’re not widely out of bounds in terms of while we’re asset sensitive.

We’re not wildly asset sensitive. And it just doesn’t feel like the moment when you’re supposed to be long. Particularly, if you have a view that rates in the go-forward decade are not going to look like rates during the 2012 to 2020 year. So, that’s where we sit.

Operator: And there are no further questions on the line at this time. I’ll turn the presentation back to Bryan Gill for any closing remarks.

Bryan Gill: Well, thank you all for joining the call today. If you have any other follow-ups, please reach out to the IR team, and we’ll be happy to help you out. Thank you.

Bill Demchak: Thanks, everybody.

Rob Reilly: Thank you.