Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Goldman Sachs US Financial Services Conference 2018
28 slides from Citizens Financial's conference presentation, Dec 4, 2018
Slide 1: Turned the Corner, Aiming for Excellence
Turned the Corner, Aiming for Excellence Bruce Van Saun Chief Executive Officer December 4, 2018
Slide 2: Forward-looking statements and use of key performance metrics and non-GAAP financial measures
Forward-looking statements and use of key performance metrics and non-GAAP financial measures This document contains forward-looking statements within the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are forward-lookin
Slide 3: We've Turned the Corner
We’ve Turned the Corner ROTCE(1) EPS(1) (Return on average tangible common equity) (Diluted EPS) 38% 13.5% $2.58 $2.58 9.8% $1.93 $1.87 7.6% $1.61 6.1% 6.7% $1.42 4.3% $1.04 3Q13(2) 2014 2015 2016 2017 3Q18 3Q13(2,3) 2014 2015 2016 2017 3Q17 YTD 3Q18 YTD annualized Where we’ve come from We’ve turned
Slide 4: Next phase: Aiming for Excellence
Next phase: Aiming for Excellence Mission To help our customers, colleagues and communities reach their potential Objective is to be a top-performing bank that delivers well for Strengthening all stakeholders our franchise while Committed to excellence in every dimension delivering Focused on long-t
Slide 5: We are led by a strong and experienced board & leadership team
We are led by a strong and experienced board & leadership team Since January 2015, have attracted or promoted from within ~45% of our Executive Leadership Group (~top 130) Leadership Team Member Title Board Member Committees Chairman and Chief Executive Bruce Van Saun Chairman & Chief Executive Offi
Slide 6: Have made consistent progress against our financial goals
Have made consistent progress against our financial goals Medium-term Key Indicators targets ~13 - 15% Adjusted/ 13.5% 11.7% 12.9% Underlying 6.8% 6.7% 6.7% 6.6% 6.8% 6.6% 7.3% 8.0% 8.4% 9.0% 9.6% 10.1% 10.4% 13.3% ROTCE(1) 4.3% 5.2% 5.2% 6.3% 6.2% Adjusted/ Underlying 68% 68% 69% 70% 68% 67% 68% 67
Slide 7: Strong execution of turnaround effort has led to outperformance vs peers
Strong execution of turnaround effort has led to outperformance vs peers 3Q18 vs. 3Q13 A strong platform well-positioned to drive value Strong operating leverage Efficiency improvement PPNR (Positive operating leverage) (Efficiency ratio change) (Pre-provision net revenue) ` 21.5% CFG Peer average v
Slide 8: RBS challenges negatively impacted Citizens balance sheet size and profitability
RBS challenges negatively impacted Citizens balance sheet size and profitability $s in billions 2007 2010 2013 2017 3Q18 (1) Total average assets $161.1 $ 139.6 $ 121.4 $150.5 $ 156.9 Noninterest expense/avg. assets(1) 4.1 % 5.5 % 6.0 % 5.2 % 5.2 % (1) PPNR/avg. assets 4.5 % 2.7 % 2.7 % 3.3 % 3.7 %
Slide 9: Substantial progress prudently releveraging the balance sheet
Substantial progress prudently releveraging the balance sheet $s in billions Net charge-off rates in line with peers over Good loan growth with rising yields(1) past decade 5.9% $113 CAGR(3) 2.5% $103 $109 $89 $96 2.0% $85 4.32% 1.5% 3.87% 3.50% 3.37% 3.32% 3.51% 1.0% 0.5% 0.0% 2013 2014 2015 2016 2
Slide 10: Highly disciplined on credit: diversified and granular core loan mix
Highly disciplined on credit: diversified and granular core loan mix $s in billions Core retail portfolio FICOs Core commercial portfolio risk ratings improved YoY improved YoY (2) $56.5 $58.4 7% <650 $54.6 7% $51.5 3% B- and lower 10% 9% 650-699 3% 14% B+ to B 18% 700-749 14% 19% 29% 56% BB+ to BB-
Slide 11: Building fee capabilities organically and through targeted acquisitions
Building fee capabilities organically and through targeted acquisitions Significant opportunity to improve fee income relative to peers (0.8% of assets vs 1.3% for peers) Consumer Commercial Investments in personnel plus sales, technology platforms and products with Broaden capabilities in DCM, M&A,
Slide 12: Continuously streamlining expense base to self-fund required investments
Continuously streamlining expense base to self-fund required investments $s in millions Focus on top-line growth and expense discipline drives positive operating leverage 2018E (1)(2) Underlying results 2014 2015 2016 2017 ex-FAMC CAGR Total revenue $ 4,691 $ 4,824 $ 5,188 $ 5,701 $ 6,070 7% Noninte
Slide 13: Rationalizing our capital base
Rationalizing our capital base Rationalizing CET1 toward peer median (1) Basel III basis 2014 2015 2016 2017 3Q18 Common equity tier 1 capital ratio (CET1) 12.4% 11.7% 11.2% 11.2% 10.8% Total capital ratio 15.8% 15.3% 14.0% 13.9% 13.4% Change in CET1 -0.7% -0.6% 0.1% -0.4% Change in CET1, CFG vs pee
Slide 14: Looking forward
Looking forward Confident that we can continue to perform well and drive toward becoming a top performing regional bank that delivers well for its stakeholders Strong and experienced board and leadership team, best-in-class talent Success will be Commitment to excellence in every dimension driven by
Slide 15: Key Messages
Key Messages Five years ago the challenge was to turn Citizens around and improve our performance and capabilities Since the IPO, the challenges have been addressed and we have turned the corner, while closing the gap to peers. Next phase: Aiming for Excellence Focused on long-term, profitable growt
Slide 16: Appendix
Appendix 3* Citizens Financial Group, Inc.”
Slide 17: BSO: Rigorous program to improve returns while driving growth
BSO: Rigorous program to improve returns while driving growth 3Q18 YoY NIM expansion of 15 bps reflects ~5 bps contribution from BSO efforts(1) Assets Liabilities Loan portfolio Deposits Reposition/optimize loan mix Optimize mix with focus on Reallocate capital within categories; lower-cost categori
Slide 18: Remain rate sensitive
Remain rate sensitive Interest rate sensitivity ranking (200 bps gradual increase) 8.0% 5.2% 4.6% Net interest income positioned to 3.6% continue to benefit from rising rates 3.0% 2.1% 1.5% 1.2% 1.0% ─ Our asset sensitivity has (0.2%) remained relatively stable at 5.2% CMA CFG RF PNC KEY BBT USB MTB
Slide 19: Data & analytics capabilities are key to our success
Data & analytics capabilities are key to our success Using data & analytics strategically across the company Deliver operational Enhance sales productivity & Improve customer experience efficiency and reduced costs accelerate growth Future of Personalize Streamline Streamline Improve Personalized fu
Slide 20: Investing in future-oriented digital services and technology platforms
Investing in future-oriented digital services and technology platforms Delivering a customer-focused, adaptable, secure & resilient technology environment Modernize strategic Data analytics Adaptive security platforms Minimize manual processes; Convert data into intelligence Prepare for emerging thr
Slide 21: Enhancing customer experience to drive growth and efficiency
Enhancing customer experience to drive growth and efficiency Consumer Commercial Launched customer account Customer Journeys Origination plans, dashboard & Embrace digital and data to improve experience performance scorecard Implemented cycle-time metrics Welcome to the bank Underwriting Streamlined
Slide 22: Citizens vs peer group by total CRE loans – 3Q18
Citizens vs peer group by total CRE loans – 3Q18 $s in billions Total CRE Total CRE loans/ Total CRE loans/ Total Total loans Total CRE Total CRE/ loans/ total total risk based total commercial assets and leases loans total assets loans capital loans CFG $159.0 $115.9 $11.8 7.4 % 10.2 % 66.2 % 20.7
Slide 23: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 22
Slide 24: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 23
Slide 25: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 24
Slide 26: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 25
Slide 27: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 26
Slide 28: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
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