Category: Philosophy
An investment philosophy is a coherent way of thinking about markets, how they work to put into practice. It’s a set of core beliefs that you can go back in order to generate new strategies to make it work. The investment philosophy of Investor Desk begins from the perspective that our clients are seeking a relationship which focuses on their short- and long-term goals via the provision of a strategic wealth management plan, coupled with a transparent, flexible and nimble investment solution. Investor Desk embraces a holistic view of a client’s business and personal circumstances and seeks to meet their goals and objectives through best of breed technology and financial products, delivered via a client centric relationshipand service. In the absence of a well-considered strategic wealth management plan, we believe there is less capacity to define an appropriate level of portfolio risk. We believe that asset allocation, and genuine portfolio diversifications are the key drivers of portfolio risk, and that high transparency and liquidity are important for navigating volatile market conditions.
the acquisition of RBC’s U.S. branch network in the Southeast, and by updating its core infrastructure and retail branch model. PNC has been very successful at organically expanding its customer base, both in commercial banking and now in retail. The expanding client base has led to solid loan, deposit, and fee income growth. Selling new products into the formerly underperforming RBC branch network has worked particularly well, and PNC now seems poised to repeat this effort with the pending acquisition of BBVA. The bank’s Midwest commercial growth strategy is paying dividends, and PNC will be attempting retail growth efforts in the same areas where commercial expansion was successful.
The successful acquisition history, seemingly successful expansion initiatives, and improved credit performance during the 2007 downturn makes PNC is one of the better operators we cover. PNC has executed on many expense-saving initiatives over the years, and management has been actively reinvesting many of these savings back in the business to stay ahead on the technology front.
Financial Strength:
The fair value of PNC Financial Services is USD 185.00, which is based on analyst’s assumption that the bank’s efficiency ratio eventually declines to about 52%, as management realizes operating leverage from infrastructure investments and the BBVA acquisition helps push efficiency for PNC to the next level. The dividend yield given by company has been very consistent year on year.
PNC is in good financial health. The bank weathered the energy downturn well, and energy loans make up a small percentage of the loan book. The bank has also weathered the COVID-driven downturn well. Most measures of credit strain remain quite manageable, and the bank’s history of prudent lending give us comfort with the risks here. PNC’s common equity Tier 1 ratio was at 10% as of June 2021, handily exceeding the bank’s targets. The capital-allocation plan remains standard for PNC, with 30% plus of earnings devoted to dividends, as much as necessary used for internal investment, and the left overs used for share repurchases.
Bulls Say:
- PNC’s acquisition of BBVA seems likely to add value to the franchise and for shareholders, and will make PNC the regional bank with the most scale.
- A strong economy, higher inflation, and potentially higher rates are all positives for the banking sector and should propel results even higher.
- In additional to acquisitions, PNC has organic expansion opportunities it is taking advantage of, which could lead to higher organic growth than peers over time.
Company Profile:
PNC Financial Services Group is a diversified financial services company offering retail banking, corporate and institutional banking, asset management, and residential mortgage banking across the United States.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
