Time will tell how much pain PNC Financial (PNC)
spared its investors through presumably sound underwriting during the
good days of the banking cycle, but management is definitely getting
ready for the other shoe to drop and warning investors that it may have
to increase its reserves even further to cover losses as Covid-19 pushes
the U.S. into recession.
Maybe this is obvious, or
at least redundant, but the margin of error for modeling banks now is
extremely high. It’s unclear when businesses will be able to get back to
normal, let alone what the ongoing impact of this shutdown will be in
the short term, and the rate and credit cycle was already moving against
banks. PNC looks like it will be okay even in a dire scenario, though,
and as is the case with most of the quality bank names, the market seems
to be pricing in an overly severe scenario today.
Read more here:
PNC Financial Getting Ready For Higher Loan Losses
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