Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q4 2024 Earnings Presentation
59 slides from Citizens Financial's earnings presentation, Jan 17, 2025
Slide 1: 4Q24 and 2024 Financial Results
4Q24 and 2024 Financial Results January 17, 2025
Slide 2: Forward-looking statements and use of non-GAAP financial measures
Forward-looking statements and use of non-GAAP financial measures This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward- looking statement. These stat
Slide 3: 4Q24 and FY2024 GAAP summary
4Q24 and FY2024 GAAP summary Full Year Q/Q Y/Y 2024 vs. 2023 $s in millions 4Q24 3Q24 4Q23 $/bps % $/bps % 2024 2023 $/bps % Net interest income $1,412 $ 1,369 $ 1,488 $ 43 3 % $ (76) (5) % $ 5,633 $ 6,241 $ (608) (10) % Noninterest income 574 532 500 42 8 74 15 2,176 1,983 193 10 Total revenue 1,98
Slide 4: 4Q24 and FY24 Underlying financial summary
4Q24 and FY24 Underlying financial summary(1) Full Year Q/Q Y/Y 2024 vs. 2023 $s in millions 4Q24 $/bps % $/bps % 2024 2023 $/bps % Net interest income $ 1,412 $ 43 3% $ (76) (5)% $ 5,633 $ 6,241 $ (608) (10)% Noninterest income 564 30 6 64 13 2,161 1,983 178 9 Total revenue 1,976 73 4 (12) (1) 7,79
Slide 5: 4Q24 Underlying financial performance detail
4Q24 Underlying financial performance detail(1) (A) (B) (C) = (A) + (B) (D) (E) = (C) + (D) $s in millions Legacy Core(2) Private Bank Core Non-Core(3) Total CFG Net interest income $1,376 $57.1 $1,433 $(21) $1,412 Noninterest income 553 10.9 564 — 564 Total revenue 1,929 68.1 1,997 (21) 1,976 Nonin
Slide 6: 2024 Underlying financial performance detail
2024 Underlying financial performance detail(1) (A) (B) (C) = (A) + (B) (D) (E) = (C) + (D) $s in millions Legacy Core(2) Private Bank Core Non-Core(3) Total CFG Net interest income $5,609 $141.3 $5,750 $(117) $5,633 Noninterest income 2,136 24.7 2,161 — 2,161 Total revenue 7,745 166.1 7,911 (117) 7
Slide 7: 4Q24 and FY2024 Overview
4Q24 and FY2024 Overview(1) Underlying PPNR drivers ■ 4Q24 Underlying EPS of $0.85; ROTCE of 10.7% $s in millions ■ 4Q24 Underlying PPNR of $684 million, up 4% QoQ 4Q24 QoQ FY24 YoY – NII up 3.1% driven by a 10 bp increase in NIM to 2.87% NII $1,412 3.1 % $5,633 (9.7)% – Fees up 5.6% primarily refle
Slide 8: Net interest income
Net interest income NII and NIM Linked Quarter $s in millions, except earning assets ■ NII up 3.1%, reflects a higher NIM and slightly lower interest- earning assets $203.1B $200.1B $198.5B $197.2B $196.6B – NIM of 2.87%, up 10 bps QoQ, given the benefit of lower deposit costs and improved mix, fixe
Slide 9: Noninterest income
Noninterest income(1) Noninterest Income details Linked Quarter ■ Underlying noninterest income increased 5.6%, reflecting the $ following key business drivers: $s in millions 4Q24 3Q24 4Q23 Q/Q Y/Y – Capital markets fees increased $27 million, largely driven by Service charges and fees $ 109 $ 109
Slide 10: Noninterest expense
Noninterest expense(1) Underlying expense up 3.5% QoQ reflecting investments in Private Bank and Commercial $ Linked Quarter $s in millions 4Q24 3Q24 4Q23 Q/Q Y/Y ■ Underlying noninterest expense of $1.3 billion, up 3.5% Salaries & employee benefits $ 657 $ 643 $ 635 $ 14 $ 22 – Salaries and benefit
Slide 11: Loans and leases
Loans and leases Period-end Core loans down ~1% QoQ with Private Bank growth largely offsetting Commercial declines Period-end loans and leases Linked Quarter $s in billions ■ Period-end loans down 1.7% including Non-Core portfolio run off of $0.9 billion; Core loans down ~1% $146.0 $143.2 $141.8 $1
Slide 12: Deposit performance and cost of funds
Deposit performance and cost of funds Strong growth in franchise deposits driven by the Private Bank 4Q24 Period-end deposits Linked Quarter $s in billions ■ Period-end deposits broadly stable, driven by a reduction in higher-cost Treasury and Commercial deposits, offset by growth $177.3 $176.4 $176
Slide 13: Highly diversified and retail-oriented deposit base
Highly diversified and retail-oriented deposit base $174.8B Period-end deposits Business mix (As of 12/31/24) Product mix Wealth Citizens 1% Business Access Time Banking 6% 13% 12% NIB 21% Commercial Savings 25% 10% Citizens Access Savings 5% Money Market Checking 32% Branch Treasury/ With Interest
Slide 14: Credit quality overview
Credit quality overview Credit provision expense; Nonaccrual loans $s in millions net charge-offs $s in millions 170% 157% 151% 136% 136% 0.50% 0.52% 0.54% 0.53% 0.46% $1,687 $1,664 $1,469 $1,527 $182$184 $192 $189 $1,364 $171$171 $171 $181 $172 $162 $616 $647 $578 $588 $590 $891 $939 $1,071 $1,017
Slide 15: Allowance for credit losses
Allowance for credit losses Allowance for credit losses CRE General Office reserve $s in millions 3Q24 4Q24 $2,318 $2,308 $2,306 $2,286 $2,259 Balance ($B) $ 3.2 $ 2.9 ACL ($MM; % coverage) $ 382 12.1 % $ 364 12.4 % 1.96% 1.99% 1.91% 1.88% 1.86% Cumulative NCOs* ($MM) $ 364 $ 433 *Cumulative losses
Slide 16: Strong capital position
Strong capital position Highlights $s in billions (period-end) 4Q23 1Q24 2Q24 3Q24 4Q24 (1)(2) ■ 4Q24 CET1 ratio of 10.8%(1) compares with 10.6% in 3Q24 Basel III basis – 9.1% CET1 ratio adjusted for AOCI opt-out removal Common equity tier 1 capital $ 18.4 $ 18.1 $ 18.1 $ 17.9 $ 17.9 ■ TBV/share of
Slide 17: Well-positioned businesses
Well-positioned businesses Transformed Best-positioned Premier Consumer Commercial Private Bank ■ Strong deposit franchise ■ Full suite of Capital Markets & ■ Building premier Private Bank grounded in primary Advisory capabilities and with exceptional service model relationships and high-quality Tre
Slide 18: Transformed Consumer Bank
Transformed Consumer Bank Significant investments over the years have resulted in Retail-oriented and a higher-quality retail deposit franchise highly insured/secured 4Q24 CFG deposit base Scaled Greater Improved Consumer Deposits Insured/Secured as as % of Total % of Total customer base engagement
Slide 19: Best-positioned Commercial Bank
Best-positioned Commercial Bank Building momentum for 2025 Delivering results ■ Strong national coverage; building high-performing middle market teams in Florida and California and Capital Markets Treasury Expand geographies, leveraging expanded NYC Metro presence Fees Solutions segments and industr
Slide 20: Building a premier Private Bank
Building a premier Private Bank As of 12/31/24 Momentum with high-quality growth Positioning to win $s in billions Deposits $12.0 $11.0 ■ Deliver a world-class client experience Total deposit cost of ~2.5% $7.0 ■ Build a distinctive HNW/UHNW brand $5.6 $4.0 ■ Investing in both bank and wealth produc
Slide 21: Building a leading NYC Metro/NJ franchise
Building a leading NYC Metro/NJ franchise Early momentum taking retail deposit share Significant Commercial opportunity Generating awareness of strong brand ■ ~4K middle market companies with full relationship potential Taking a local/neighborhood-based approach ■ Aligned coverage model to emphasize
Slide 22: FY2025 Outlook vs. 2024
FY2025 Outlook vs. 2024 2024 2025 Underlying(1) Underlying outlook Net interest income $5,633MM Up 3-5% NIM 2.85% FY2025 NIM of ~3.00% $139.2B spot Spot loans up low single digits driven by Private Bank and 2H25 Commercial activity; up mid single digits excluding Non-Core Loans $142.7B average Avera
Slide 23: FY2025 Underlying expense outlook
FY2025 Underlying expense outlook(1) Underlying expenses in $s in millions CFG ex Private Bank & Private Wealth Total CFG Up ~2.6% Up ~4% ~$180 ~$5.0B $4,883 ~$115 ~$5.3 B $5,300 $5,078 ~$(170) CFG ex Private TOP/ Other Strategic Compensation/ CFG ex Private Bank efficiencies investments Other Bank
Slide 24: TOP programs key to driving positive operating leverage
TOP programs key to driving positive operating leverage Transforming how we operate and deliver for customers and colleagues TOP program revenue Commentary $s in millions and efficiency benefits ■ Maintain discipline on discretionary expense ~$425 categories ■ TOP 10 areas of focus – Optimize procur
Slide 25: 1Q25 outlook vs. 4Q24
1Q25 outlook vs. 4Q24 1Q25 4Q24 Underlying(1) Underlying outlook Net interest income $1,412MM Down 1.5 to 2.5%, reflects day count impact of ~$25MM Noninterest income $564MM Down ~2% given seasonality Noninterest expense $1,292MM Up 1.5-2% given seasonality Net charge-offs $189MM; 53 bps Down modera
Slide 26: Medium-term financial targets
Medium-term financial targets(1) Medium-term financial targets ROTCE(1) ~16-18% CET1 ~10.00-10.50% Dividend ~35-40% Payout Ratio Efficiency Ratio(1) Mid-50's % Key economic assumptions ■ Real GDP growth averaging ~2-2.5% annually over the medium term ■ Unemployment rate centered around ~4% over the
Slide 27: Meaningful NIM improvement over the medium term
Meaningful NIM improvement over the medium term Medium-term NIM target 3.25 to 3.50% Factors supporting 3.25 - 3.50% NIM • Swaps and Non-Core run off Rates at or above 4% favor • Steadily improving balance sheet mix top end of range or above • Fed funds terminal range of 3.0 - 4.0% 3.50% • Cumulativ
Slide 28: Medium-term ROTCE outlook
Medium-term ROTCE outlook(1) ROTCE ~16-18% NIM expands to ~3.25-3.50% ~1% ~(2)% ~2-3% ~1% ~16-18% ~15-16% ~3-4% 10.7% Time- based benefit 4Q24 ROTCE Terminated + Active swaps Consumer Credit AOCI & other MTO swaps & + Fixed-rate Commercial improvement capital impacts Non-Core repricing/BSO Private B
Slide 29: Citizens is an attractive investment opportunity
Citizens is an attractive investment opportunity Citizens continues to have a series of unique initiatives that will lead to relative medium-term outperformance – Transformed Consumer Bank with further deposit growth and Wealth revenue potential; well positioned in NYC Metro to gain market share; pe
Slide 30: Appendix
Appendix ■ Financial Performance ■ Balance Sheet Optimization ■ Interest Rate Risk Management ■ Credit
Slide 31: Linked-quarter Underlying results
Linked-quarter Underlying results(1) Average loans Average deposits Return on average total $s in billions $s in billions tangible assets $142.0 $140.9 ê1% $174.1 $174.3 stable é4 bps 0.88% 0.90% 0.74% 0.78% 3Q24 4Q24 3Q24 4Q24 3Q24 4Q24 Pre-provision profit Net income available to Return on average
Slide 32: Year-over-year Underlying results
Year-over-year Underlying results(1) Average loans Average deposits Return on average total $s in billions $s in billions tangible assets ê5% ê2% stable $148.0 $140.9 $177.1 $174.3 1.02% 0.90% 0.78% 0.78% 4Q23 4Q24 4Q23 4Q24 4Q23 4Q24 Net income available to Return on average tangible Pre-provision
Slide 33: Full year Underlying results
Full year Underlying results(1) Average loans Average deposits Return on average total $s in billions $s in billions tangible assets ê6% stable ê16 bps $175.3 $174.5 $152.2 1.13% $142.7 0.91% 0.92% 0.76% FY2023 FY2024 FY2023 FY2024 FY2023 FY2024 Net income available to Return on average tangible Pre
Slide 34: FY2024 Scorecard
FY2024 Scorecard(1) 2024 2024 Underlying outlook Underlying results Net interest income Down 6-9%; net swaps impact of ~4-5% Down 9.7%; net swaps impact of ~5% ~ NIM FY2024 average 2.80-2.85%; 4Q24 exit NIM ~2.85% FY2024 average 2.85%; 4Q24 2.87% Average loans down 2-3% reflecting Non-Core run off a
Slide 35: Strong liquidity and improving funding profile
Strong liquidity and improving funding profile Increasing structural long-term debt Maintaining a high level of liquidity $s in billions; period-end while reducing shorter-term borrowings $s in billions $13.4 $53.0 $11.9 $12.5 $12.3 $50.2 $52.0 $52.8 $52.0 $10.2 $41.1 $41.7 $42.4 $42.2 $40.0 27% 27%
Slide 36: BSO actions to further strengthen capital & liquidity, improve returns
BSO actions to further strengthen capital & liquidity, improve returns Non-Core portfolio $s in billions Quarterly 2025 $6.9 $6.2 $5.5 $2.2 $5.0 $2.1 $4.5 $2.0 $3.4 $1.9 $2.9 $1.8 $2.9 $2.4 $4.7 $1.9 $1.8 $4.1 $1.5 $1.5 $3.5 $3.1 $2.7 $0.3 1.2 $1.4 $— 0.6 4Q24 1Q25 2Q25 3Q25 4Q25 4Q26 4Q27 ■ Non-Cor
Slide 37: Protecting NII and reducing earnings volatility through economic cycles
Protecting NII and reducing earnings volatility through economic cycles ■ Receive-fixed cash flow swaps represent the primary tool to manage overall asset sensitivity – During 4Q24, executed ~$11.5 billion in forward starting swaps with start dates ranging from 1Q26 to 3Q27 and a W.A. receive rate o
Slide 38: AOCI accretion
AOCI accretion Projected accretion to TCE and CET1 adjusted for AOCI opt-out removal(1) $s in billions Accretes to CET1(2) TCE CET1(2) 12/31/2024 $(0.9) $(0.3) $(2.4) $(3.6) $(2.7) 12/31/2025 $(0.4) $(0.3) $(2.0) $(2.7) $(2.3) 12/31/2026 $(0.1) $(0.3) $(1.7) $(2.1) $(2.0) ~42% ~26% Burn-off by YE202
Slide 39: $69.8B Commercial credit portfolio
$69.8B Commercial credit portfolio Diverse and granular portfolio Commercial portfolio risk ratings(4) $s in billions % of ($ in billions) Balances total CFG C&I $74.4 $71.8 $69.8 Finance and Insurance B- and lower 7% 8% 7% Capital call facilities $ 6.1 4% B+ to B 18% Other Finance and Insurance 6.4
Slide 40: Commercial Real Estate - $5.1B Office portfolio: well diversified
Commercial Real Estate - $5.1B Office portfolio: well diversified(1) Property type $2.9B General Office class & location Life Sciences $1.0B 20% CBD Class A Suburban Class B 15% 27% Credit Tenant CBD Class B 22% 11% $1.1B Suburban Class A 39% General Office 58% $2.9B Suburban Class C 3% CBD Class C
Slide 41: $69.4B Retail credit portfolio
$69.4B Retail credit portfolio Retail loans(1) High quality, diverse portfolio Other retail ■ Mortgage – FICO ~790 Education - 7% Residential – Weighted-average LTV of ~51% refinance 11% mortgage ■ Home equity – FICO ~760 – ~32% secured by 1st lien Education - 5% – ~99% CLTV less than 80% in school
Slide 42: Allocation of allowance for credit losses by product type
Allocation of allowance for credit losses by product type December 31, 2024 September 30, 2024 Loans and Loans and Allowance Coverage Allowance Coverage $s in millions Leases Leases Commercial and industrial(1)(2) $ 42,551 $592 1.39 % $ 43,825 $621 1.42 % Commercial real estate 27,225 703 2.58 27,98
Slide 43: Delinquency by product type
Delinquency by product type December 31, 2024 (%) September 30, 2024 (%) Days Past Due and Accruing Days Past Due and Accruing Current 30-59 60-89 90+ Nonaccrual Current 30-59 60-89 90+ Nonaccrual Commercial and industrial(1) 99.28 % 0.08 % 0.05 % 0.02 % 0.57 % 99.36 % 0.12 % 0.01 % 0.01 % 0.50 % Co
Slide 44: Notable items
Notable items(1) Quarterly results reflect notable items primarily related to integration costs associated with recent acquisitions, as well as TOP revenue and efficiency initiatives and other items. In addition, fourth quarter 2024 and fourth quarter 2023 include a notable item for an industry-wide
Slide 45: Notes
Notes Notes on Non-GAAP Financial Measures See important information on our use of Non-GAAP Financial Measures at the beginning this presentation and reconciliations to GAAP financial measures at the end of this presentation. Non-GAAP measures are herein defined as Underlying results. Where there is
Slide 46: Notes continued
Notes continued Notes on slide 18 - Transformed Consumer Bank 1) Mass affluent and above are retail households with the higher value of IXI or current month deposit/investment balances greater than or equal to $100K. 2) Estimated based on available company disclosures. 3) Includes collateralized sta
Slide 47: Notes continued
Notes continued Notes on slide 41 - $69.4B Retail credit portfolio 1) See general note c). 2) Reflects period end balances. Notes on slide 42 - Allocation of allowance for credit losses by product type 1) Coverage ratio includes total commercial allowance for unfunded lending commitments and total c
Slide 48: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 4Q24 Change 2024 Change 4Q24 3Q24 4Q23 3Q24 4Q23 2024 2023 2023 $ % $ % $ % Noninterest income, Underlying: Noninterest income (GAAP) A $574 $532 $500 $42 8% $74 15% $2,1
Slide 49: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 4Q24 Change 2024 Change 4Q24 3Q24 4Q23 3Q24 4Q23 2024 2023 2023 $/bps % $/bps % $/bps % Operating leverage: Total revenue (GAAP) C $1,986 $1,901 $1,988 $85 4.56% ($2) 0.0
Slide 50: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations QUARTERLY TRENDS FULL YEAR $s in millions, except share, per share and ratio data 4Q24 Change 2024 Change 4Q24 3Q24 4Q23 3Q24 4Q23 2024 2023 2023 $/bps % $/bps % $/bps % Return on average total tangible assets and return on average total tangible asset
Slide 51: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 4Q24 Change 2024 Change 4Q24 3Q24 4Q23 3Q24 4Q23 2024 2023 2023 $/bps % $/bps % $/bps % Card fees, Underlying: Card fees (GAAP) $97 $93 $70 $4 4% $27 39% $368 $296 $72 24
Slide 52: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS 2Q24 1Q24 Noninterest income, Underlying: Noninterest income (GAAP) A $553 $517 Less: Notable items 4 3 Noninterest income, Underlying (non-GAAP) B $549 $514 Total revenue, Underly
Slide 53: Non-GAAP reconciliations - CET1 adjusted for AOCI opt-out removal
Non-GAAP financial measures and reconciliations - CET1 adjusted for AOCI opt-out removal $s in millions, except share, per share and ratio data 4Q24 3Q24 CET1 Ratio adjusted for AOCI opt-out removal CET1 capital $ 17,900 $ 17,941 Less: AFS securities - AOCI 1,613 1,181 HTM securities - AOCI(1) 756 7
Slide 54: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS 4Q24 Change 4Q24 3Q24 4Q23 3Q24 4Q23 $/bps % $/bps % Total Retail loans - at period-end $69,427 $69,824 $71,514 ($397) (1%) ($2,087) (3%) Less: Non-core retail loans - at period-en
Slide 55: Non-GAAP reconciliations excluding Private Bank & Non-Core
Non-GAAP financial measures and reconciliations excluding Private Bank & Non-Core $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 4Q24 3Q24 4Q23 2024 2023 Net income available to common stockholders, Underlying: Net income available to common stockholders (GAAP) $36
Slide 56: Non-GAAP reconciliations excluding Private Bank & Non-Core
Non-GAAP financial measures and reconciliations excluding Private Bank & Non-Core $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 4Q24 3Q24 4Q23 2024 2023 Return on average total tangible assets and return on average total tangible assets, Underlying: Average total
Slide 57: Non-GAAP reconciliations excluding Private Bank & Non-Core
Non-GAAP financial measures and reconciliations excluding Private Bank & Non-Core* 4Q24 (GAAP) 4Q24 Notables 4Q24 (Non-GAAP) Commercial Consumer Legacy Private (3) Private Legacy Private Other Non-Core Legacy Non-Core Non-Core Total $s in millions Banking Banking(1) Core(2) Bank Bank Core Bank Net i
Slide 58: Non-GAAP reconciliations excluding Private Bank & Non-Core
Non-GAAP financial measures and reconciliations excluding Private Bank & Non-Core* 4Q 2024 YTD (GAAP) 4Q 2024 YTD Notables 4Q 2024 YTD (Non-GAAP) Commercial Consumer Legacy Private (3) Private Legacy Private Other Non-Core Legacy Non-Core Non-Core Total $s in millions Banking Banking(1) Core(2) Bank
Slide 59: Citizens Financial Group, Inc.
3< Citizens Financial Group, Inc.”
Citizens Financial Group — Q4 2024 Earnings Presentation on 6ix