PNC Bank 2015 Annual Report Download - page 4

Competition also intensified in 2015, coming not only
from our industry peers but also from the technology
sector. Recent investments by venture capitalists
in financial technology (FinTech) firms, as well as
established social media and communications firms,
are creating new offerings against which we have to
compete. And these companies aim to disintermediate
banks by moving aggressively to cater to consumers’
desires for less complexity, greater speed of delivery
and ubiquitous platforms that work independently of
clients’ primary banking relationships.
The FinTech boom we are witnessing today is not
entirely unlike the dot-com revolution of the 1990s.
There are legitimate questions about the ability of
many of these companies to withstand a downturn or
even to create a revenue model that supports their
development and marketing costs. In addition, many
of them represent significant security concerns for
consumers and our industry. Many of these services
require that customers provide their online banking
login credentials, and they have gained or seek to gain
access to the payments system despite the fact that
they are not subject to the same regulatory oversight
as banks.
Still, it is clear that FinTech is changing the way our
customers want to bank and, like the Internet, will
ultimately have a profound impact on the way we
interact with and serve our clients.
While perhaps daunting, there are clear opportunities
for banks that have the resources and risk
management systems to meet these FinTech
companies in the marketplace and offer a better,
PNC’s stock reached an all-time-high share price in 2015, finishing the year
4 percent higher than at the close of 2014. And over the three-year period
ending December 31, 2015, PNC ranked first among our peer group in total
shareholder return.
In addition, we continued to grow tangible book value in 2015, with an increase of
6 percent over the prior year, and maintained strong capital and liquidity positions
even as we returned more capital to shareholders through repurchases and
higher dividends. Repurchases for the full year totaled 22.3 million common
shares for $2.1 billion, and we raised the quarterly dividend on our common stock
6 percent to 51 cents per share in the second quarter. Our capital levels have allowed us to support the growth of
the business and meet regulatory requirements while also delivering strong capital returns to our shareholders.
After years of historically low interest rates that have
squeezed net interest margins for institutions across
the industry, persistent concerns about the global
economy further delayed Federal Reserve action
until December, when we finally saw the first rate
increase since 2006.
Meanwhile, the pressures of new and expanded
regulations persisted, requiring substantial
investments of energy and capital. Across the bank,
we changed loan pricing and deposit strategies to
align them with the new liquidity coverage ratio
rules. We continued to refine and improve our
Comprehensive Capital Analysis and Review models
and processes. And we achieved a major milestone
with the announcement in June that PNC Bank,
N.A. had satisfied all of its requirements under the
Office of the Comptroller of the Currency’s mortgage
consent orders.
Steady Progress in a Challenging Time
The Next Frontier of Innovation and Competition
Three-Year
Total Return
Peer
Group PNCS&P 500
Stock price change and dividend
reinvestment. Three years ended
December 31, 2015.
13%
15%
21%
No. 1
Among
Peer Group
Creating Long-Term Value and Returning
Capital to Our Shareholders