PNC's Q4 2024 Earnings Call: Navigating Contradictions in Deposit Growth, NII, and Net Interest Margins

Record Financial Performance:
- PNC Financial Services Group reported net income of $1.6 billion for Q4 2024, with the full year 2024 earnings reaching $6 billion, or $13.74 per share.
- The growth was driven by strong net interest income from fixed asset repricing and record revenue from businesses like Commercial and Retail Banking.

Operating Leverage and Expense Management:
- The company achieved positive operating leverage by maintaining expense discipline, with non-interest expense decreasing by $488 million or 3% compared to 2023.
- This was achieved through their continuous improvement program and strategic investments in new products and expansion.

Deposit Growth and Product Expansion:
- Average deposit balances grew by $3 billion, reflecting continued growth in both interest-bearing commercial balances and non-interest-bearing deposits, which remained stable at 23% of total average deposits.
- The growth was driven by strong commercial demand and product expansion, particularly in their expansion markets.

Floating Rate Assets and Capital Management:
- PNC increased their floating rate securities to 20% of their total portfolio, up from 6% a year ago, as part of managing interest rate risk.
- The move aligns with their strategy to reduce interest rate sensitivity and grow capital, as their CET1 ratio was estimated at 10.5%.