Ann: AGM Chairman's Address and Chairman and MD Presentations, page-14

Well they have just released bad news IMO, and looked desperate with dodgy graphs as well. I'm very surprised it is holding up. It is good news that they will keep a DRP going rather than raising capital by more uncertain means (discounted placements always suck). It is bad news that lending will probably not hit the target, the 30d arrears are up, and that recent 1 yr stats have turned down - maybe 4% or so based on my rough numbers including rough growth in the PDP size. These might be blips, or alternatively they could be harbingers of a change in trend.

If you have a look at the indices, consumer discretionary and consumer staples are not doing too well as there is a theory doing the rounds about the "wealth effect", which is that if peoples wealth decreases (due to housing market and credit constraints), they spend less, and save more, and thus economic growth inputs from consumption is lower. This sort of economic stress might be good for PNC in attracting needy borrowers, but it would not be great for the reliability of payments from the troubled sector PNC is dealing with. Some China watchers are saying there is a recession or relative recession there right now (and definitely a retail recession), and we all know what that could mean for our economy.

There have been some minor signs that retail sales growth has reduced - but no smoking gun - http://www.abs.gov.au/ausstats/[email protected]/mf/8501.0
It may be that what the market fears will not happen, but ATM the market is placing its bets. PNC's slightly worse numbers are not a reason for confidence, even if they hit $20m npat this year or so. Relying on the more vulnerable end of the market is a really terrible place if the economy turns down. You can see how CCP and CCV got super smashed in the GFC as an example. (CCP fell from $12 to 50c significantly on underperformance of their PDLs, CCV lost about 65%, CLH was in a massive downtrend anyway).

Another underlying issue is the senate "off broadway" enquiry. The outcomes of these reviews are always uncertain, even if we believe that PNC is offering a great product to those who need it (and I do think PNC has a good offering, and is a benefit to the consumers it deals with, they need as many options and competitors for their business as possible as well).

I'd never suggest you should sell your shares (or buy) or take any action, but I do think holders should try to see past the spin (doctors) and excitement, and maintain some perspective on the update, and the relative odds and impacts of varied economic outcomes.

All IMO