Bill Demchak: Can jump in here, right? That one credit has been staring us in the face for a while. We’ve been working on it. It’s a credit that both BBVA and PNC we’re in. So it shows up as outsized. We had big reserves against it. As you’ve seen in our non-performers and our delinquencies there is going down. This is kind of I don’t know what you call this something going through a snake, but we’ve been staring at it and we charged it off and that’s showing the elevation this quarter, but I wouldn’t read into that.
Rob Reilly: Yes. No underlying trend or anything problematic with asset category.
John Pancari: What was that industry?
Rob Reilly: Telecommunications.
Operator: Our next question is from the line of John McDonald with Autonomous Research. Please go ahead.
John McDonald: Rob, I wanted to just follow up on the NII question from John there. Can you just remind us where you are on kind of interest rate positioning? Building in small rate hikes in the beginning of the year, maybe cut later, how do rate hikes from here kind of impact you? And — just a reminder of where you are on the swap book and how that’s influencing NII today and how it rolls off would be helpful?
Rob Reilly: Well, sure. Let me — I’ll try to cover some of that, and then we can follow that up. I mean, definitely, we’re positioned to benefit from the two rate hikes that we expect 25 basis points each in February and March. We do have a 25 basis point cut in December, but that won’t play largely in the ’23 performance. So, we’re positioned well against that, and we’ll grow our NII. We’re pointing to between 10% and 13% in terms of that range year-over-year. I will say, when we jumped into this right away, forecasting for a full year in terms of guidance is always difficult. This year, in particular, it’s more difficult than most. You’ve heard that sentiment from some of our peers that have already reported. Really difficult because of all the uncertainties that we all know about.
So we put out what we think we can achieve. That’s — Bill and I talked a little bit about maybe some upside to that in terms of loan spreads. But everything that we know now with all the uncertainties, that’s where we’re positioned. No big change in terms of our rate management in terms of the swaps we’ve disclosed at around $40 billion or so. But of course, that’s all part of how we manage the balance between our fixed and variable.
Bill Demchak: The simplest way to think about that, John, is we — through the course of the year, the DV01 or the sensitivity we have for our long positions as if anything, decreased. So think about that in terms of both the securities book and the swap book. So we remain largely asset-sensitive, happy with that position. I mean that over time, changes with the mix of swaps and securities. The swaps themselves it’s kind of irrelevant to look at them separately, but they’re very short, and they roll off in big bulk — a couple of years.
Rob Reilly: 2.5.
John McDonald: Okay. And Rob, maybe as a follow-up, could you unpack a little bit of the outlook for the fee revenues that you gave for 2023, just some of the headwinds and tailwinds that are leading to that outcome on the non-interest income?
Rob Reilly: Yes. Yes. Sure, John. So just in terms of the categories where we expect to see growth capital markets, we do expect mid-single-digit growth, which is good and consistent with our expectations. Our steady Eddie, card and cash management will probably be up high single digits and then those two will be offset by continuing headwinds in our asset management, given the equity markets as well as lower mortgage production. So, you put all that together, and that’s how we get into our stable to up 1% for the full year.
