PNC to Expand Consumer Lending, Increase Cross-Selling, CEO Saysby
Bank will start by boosting credit-card business, Demchak says
Lender weighing expansion in Dallas, Minneapolis, Kansas City
PNC Financial Services Group Inc., the U.S. regional bank that lends primarily to commercial customers, plans to boost efforts to increase consumer loans as low interest rates crimp profits.
PNC will increase its cross-selling efforts, starting with targeting current customers with tailored credit-card offers, Chief Executive Officer William Demchak said Wednesday at an investor conference in New York. The Pittsburgh-based lender also will debut a new origination-and-servicing platform to digitize home-equity lending.
“We’re rebuilding the engine here to drive gains and market share, increase cross-sell, and reduce our costs to serve loans,” said Demchak, 54. “We don’t like to just be an interest rates story.”
Regional banks in the U.S. have turned to fee-oriented products as persistently low interest rates eroded profits following the financial crisis. PNC’s plan to accelerate consumer lending through cross-selling comes as Wells Fargo & Co. has agreed to pay $185 million to settle allegations that bank employees opened 2 million credit-card and other accounts for customers without their knowledge to meet product sales goals.
Nearly two-thirds of PNC’s loans are to commercial accounts, according to a presentation at the conference. That compares with an average of 53 percent among peers, the bank said.
“I actually don’t like our commercial-to-consumer mix because it has pressured our yields,” Demchak said. “We have the capacity to accelerate consumer loan growth simply by executing faster and better.”
The lender will start by building its credit-card business, which has $4 billion to $5 billion in long-term growth opportunity, Demchak said. It also plans to offer college students and recent graduates credit cards, and expand direct lending for autos, he said.
PNC is also seeking to expand its corporate banking capabilities in Dallas, Minneapolis and Kansas City, he said.
Demchak said the firm is looking for ways to monetize its 21 percent stake in BlackRock Inc., the world’s largest money manager. The lender has explored a spin out of the stake, he said.
“We’ve looked at every iteration of ways to find a way to monetize that in a shareholder-friendly way, thus far haven’t come up with anything that’s executable,” Demchak said.