PITTSBURGH, June 22, 2017 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) announced today the results of its annual company-run stress test conducted in accordance with regulations of the Board of Governors of the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. These company-run stress tests are designed to help assess whether financial institutions have sufficient capital to absorb losses and support operations during hypothetical severely adverse economic conditions over a nine-quarter projection period. The projection period for the 2017 test covers January 1, 2017 to March 31, 2019.
The supervisory severely adverse scenario provided by the Federal Reserve and OCC for the 2017 annual company-run stress test assumes a severe global recession that is accompanied by a period of heightened stress in several markets, including corporate loan markets and commercial real estate markets. Under the hypothetical severely adverse scenario provided by the agencies, PNC estimates that its ending and minimum regulatory capital ratios would be as follows:
Basel III Regulatory Capital Ratios
Common Equity Tier 1
Tier 1 Risk-Based Capital
Total Risk-Based Capital
Tier 1 Leverage
Ending Q1 2019
These results are the product of a forward-looking regulatory exercise using hypothetical macroeconomic assumptions that are far more adverse than currently expected by the Federal Reserve or PNC, and do not represent a forecast of PNC's future capital levels or anticipated economic conditions.
As required by applicable regulations, capital ratios are calculated (a) for the first quarter of 2017 using the actual capital actions undertaken in that quarter and (b) for the remaining eight quarters of the stress period, assuming that (i) there are no repurchases or redemptions of regulatory capital instruments; (ii) there are no issuances of common stock or preferred stock (other than equity issuances pursuant to expensed employee compensation programs); (iii) the dollar amount of quarterly common stock dividends is equal to the quarterly average dollar amount of common stock dividends paid over the course of the second, third, and fourth quarters of 2016 and first quarter of 2017 (for PNC, the quarterly average amount of common dividends during this period was $268 million); and (iv) payments on other regulatory capital instruments are made equal to the stated dividend, interest, or principal due.
The Transitional Basel III ratios were determined based on the definitions of, and deductions from, capital under the Basel III rules as such definitions and deductions are phased-in for 2016, 2017, 2018, and 2019 and using the standardized approach for risk weights included in the Basel III rules.
Results of PNC's annual Dodd-Frank company-run stress test, including PNC's estimates of pre-provision net revenue, other revenue, loan and other losses, net income before taxes, and regulatory capital ratios for PNC, as well as additional information on the methodologies used in conducting the stress test, may be found at www.pnc.com/regulatorydisclosures.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.