PNC Financial Services Group plans to increase consumer lending with its current tilt toward commercial loans generating lower overall loan yields.
The $361 billion-asset PNC will accelerate auto lending, credit cards, mortgages and student loans, Chairman and CEO Bill Demchak said Wednesday at the Barclays Global Financial Services Conference. Additionally, the Pittsburgh company will begin making online installment loans in the fourth quarter.
"We've been operating below our potential on the consumer side, particularly in terms of product capability, fulfillment and the speed of delivery," Demchak said. "Our embarrassing opportunity is the fact that we are not serving our customers well today."
At midyear about 66% of PNC's total loans were commercial and 34% were consumer; that compares with a mix of 53% and 47% for its peers. Its overall loan yield was 3.6%, versus 4.4% for its peers.
Expanded consumer lending will help PNC "create positive operating leverage without solely relying on near-term rate increases," Demchak said.
"On the consumer side, where yields are higher, our processes are cumbersome and turnaround is slow and, frankly, it's unacceptably slow," Demchak said.
PNC should be able to increase its consumer lending through improved execution, such as making faster decisions on loan applications, Demchak said. It is spending $1.2 billion over five years to improve technology, such as tripling its data center volume capacity, moving to an in-house cloud network and adjusting to new compliance standards.
PNC spokesman Fred Solomon said in a statement emailed after Demchak's remarks that the bank "has been very conservative, even within its own rules," and that Demchak "wants employees to make decisions within our guidelines to service the customers we could, but are not now, lending to."
Demchak also said too many prospective home equity loan borrowers are walking away. They are abandoning the applications before final approval because PNC isn't making fast enough decisions, he said.