Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2017
48 slides from Citizens Financial's conference presentation, Sep 12, 2017
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Bruce Van Saun Chief Executive Officer September 12, 2017
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. Any statement that does not describe historical or current facts is a forward-looking statement
Slide 3: Turning the corner — elevated our mission & sharpened how we will differentiate
Turning the corner — elevated our mission & sharpened how we will differentiate We have executed well on our turnaround plan We have built a solid foundation with multiple levers to continue to improve our performance to peer median and beyond Turning Entering a new phase focused on becoming a
Slide 4: Solid franchise with leading positions in attractive markets
Solid franchise with leading positions in attractive markets $151.4 billion in total assets(1) Robust deposit market share of 12.0% in top 10 MSAs(2) – #2 deposit market share in New England(2) Diverse economies/affluent demographics CFG corporate headquarters Providence, RI CFG branch locatio
Slide 5: Substantial progress in prudently growing the balance sheet
Substantial progress in prudently growing the balance sheet Top 5 deposit market share in 9 of 10 largest MSAs(4) Dimension(1) Rank(2) $90.9 billion $106.4 billion Assets: $151.4 billion #12 2012(11) 2Q17(11) Loans: $109.0 billion(3) #11 20% 29% #12 nationally; Deposits: $113.6 billion Top 5 rank in
Slide 6: Strong, clean balance sheet funded largely by robust deposit franchise
Strong, clean balance sheet funded largely by robust deposit franchise Well capitalized with a common equity tier 1 capital ratio of 11.2% Strong asset-quality performance with net charge-offs of 28 bps(1) in 2Q17 Robust deposit franchise with $91.2 billion of average core deposits(2), with 55
Slide 7: Good execution and demonstrated progress
Good execution and demonstrated progress We have executed well on our turnaround plan We are entering a new phase focused on continued improvement in risk-adjusted returns and becoming a top-performing bank ─ Strong execution against all strategic initiatives ─ Further opportunities to drive con
Slide 8: Delivered attractive balance sheet and revenue growth in 1H17
Delivered attractive balance sheet and revenue growth in 1H17 1H17 vs. 1H16 A strong platform well-positioned to drive value Strong loan growth Growing revenues faster Higher NIM expansion (Average total loan growth) (Total revenue growth) (Net interest margin change) ` 7.0% 11.1% vs Peers vs Peers
Slide 9: Continued focus on expense control and improving returns
Continued focus on expense control and improving returns 1H17 vs. 1H16 Well-controlled expenses Strong operating leverage Efficiency improvement (Efficiency ratio(1) change) while investing for growth (YoY Positive operating leverage(1)) (Noninterest expense change) vs Peers 7.1% vs Peers vs Peers 4
Slide 10: Making consistent progress against our financial targets
Making consistent progress against our financial targets IPO-based Key Indicators medium-term 9.0% 9.6% targets 8.0% 8.4% 6.8% 6.7% 6.7% 6.6% 6.8% 6.6% 7.3% 6.3% 6.2% Adjusted 4.3% 5.2% 5.2% ROTCE(1) 10%+ Adjusted return 0.85% 0.89% 0.68% 0.66% 0.69% 0.69% 0.67% 0.68% 0.67% 0.68% 0.72% 0.80% 0.79% 1
Slide 11: Our vision and credo guide us: The destination
Our vision and credo guide us: The destination Colleagues To help our customers, colleagues and Regulators Customers Mission Investors communities reach their potential Communities & Society To be a top-performing bank distinguished by its customer-centric culture, Vision mindset of continuous impro
Slide 12: The roadmap: How we will stand out from the competition
The roadmap: How we will stand out from the competition Customer centricity — Expertise and deep knowledge of customers — Tailored advice, reinforced by insights from data and analytics Strong culture Team-oriented Agile and innovative Significant investment in customer experience Invested
Slide 13: We continue on the path to driving enhanced shareholder returns
We continue on the path to driving enhanced shareholder returns Since 3Q13, delivered ~530 basis points of improvement in Adjusted ROTCE to 9.6%(1) Further opportunities to improve returns Grow higher-return assets Optimize deposit costs Education Data & analytics to guide Strong capital positio
Slide 14: Optimizing loan mix to help drive improving risk-adjusted returns
Optimizing loan mix to help drive improving risk-adjusted returns Targeting growth opportunities and further portfolio optimization by recycling capital into more attractive growth and relationship categories Average YoY Loans Average Consumer Loan category 2Q17 Growth Grow Education and Merchant
Slide 15: Strong deposit base, with opportunities to grow stable deposits cost-effectively
Strong deposit base, with opportunities to grow stable deposits cost-effectively Consumer Data & analytics drive holistic and personalized customer $110.8 billion 2Q17 average deposits targeting models across all programs and products 82% Core(1) Executing targeted mobile and online digital cust
Slide 16: Focus on growing fee income delivering steady progress
Focus on growing fee income delivering steady progress $ millions YoY fee income growth Consumer Wealth fees: Advisory platform continues to $435 scale with fee-based sales increasing 135% $381(2) YoY. Total sales growth driven by talent $368(2) $377 $379 $370 $355 acquisition and improved product
Slide 17: Continuing 'glide path' of capital normalization
Continuing ‘glide path’ of capital normalization CET1 capital comparison(1) Highlights Continue to maintain strong CET1 capital position relative CMA 11.5% to our peers ─ Expect annual normalization of 40-50 bps given strong RF 11.5% loan growth and capital return CFG 11.2% Received non-objectio
Slide 18: TOP IV launch demonstrates our continuous improvement mindset
TOP IV launch demonstrates our continuous improvement mindset Tapping Our Potential (TOP) programs remain on track TOP IV Program Targeting run-rate pre-tax benefit of ~$90-$105 million by end of 2018 Revenue Initiatives Target ~$45 million New Channels: Using digital as a sales engine, building o
Slide 19: Using data & analytics to reach and support customers more effectively
Using data & analytics to reach and support customers more effectively Consumer Improving Targeting — Direct Mail Enabling Sales Intelligence — Alerts Expanding Sales Channels — Fulfillment New holistic and personalized Enable front-end colleagues across Use data to deliver true customer targe
Slide 20: Future-oriented digital services and technology platforms
Future-oriented digital services and technology platforms Modernize Strategic Data & Analytics Security Platforms Minimize manual processes and Enabling a data environment Prepare for emerging threats allow partners & FinTechs to and driving a consumption through trusted, simple and contribute
Slide 21: Our focus on technology delivers for our customers and the company
Our focus on technology delivers for our customers and the company Enhancing our digital offerings to customers… Consumer Commercial Investment advisory Building best-in-class Treasury Solutions platform to — 3Q17 launch of SpeciFi™, our robo-advisory FinTech feature rich online and mobile banki
Slide 22: Citizens has delivered consistent EPS growth, though valuation has fallen off
Citizens has delivered consistent EPS growth…. $0.61 $0.63 $0.64 $0.66 $0.56 $0.55 $0.46 $0.57 EPS $0.41 $0.52 CFG GAAP consensus estimates(3) CFG Adjusted/Underlying(2) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 …though valuation has fallen off 2017E/16 Adj 2017 P/E 16 EPS growth(2,3) Ratio(2,3) MTB C
Slide 23: Investment thesis
Investment thesis We have executed well on our turnaround plan As we enter a new phase focused on growth and building a great bank, we are confident in our outlook ─ Strong Board and talented and seasoned management team ─ Focus on continuous improvement will drive continued EPS growth and ROTCE
Slide 24: Appendix
Appendix %£ Citizens Financial Group, Inc” 23
Slide 25: 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 ~39% of our Executive Leadership Group (top 132) Leadership Team Member Title Board Member Committees Bruce Van Saun Chairman and Chief Executive Officer Bruce Van Saun Chairman
Slide 26: Summary of progress on strategic initiatives
Summary of progress on strategic initiatives 2Q17 Initiative Commentary Status Primary households up ~7,000 YoY and added ~9,000 primary HHs with a loan or investment. Continue to build Grow and deepen relationships out Mass Affluent and Affluent value propositions. Leveraging data and analytics cap
Slide 27: At Citizens, we continue to smartly grow our balance sheet
At Citizens, we continue to smartly grow our balance sheet $ billions Total loans(1) $109 23% $96 $103 $89 Good loan growth with rising yields 3.80% 3.37% 3.32% 3.51% 2014 2015 2016 2Q17 Loan yield 9% 22% 24% 22% 21% (2) Return on loan book regulatory capital improving 2014 2015 2016 2Q17 5.
Slide 28: Re-balancing retail loan mix to drive improved risk-adjusted returns
Re-balancing retail loan mix to drive improved risk-adjusted returns Retail loan performance $ billions 2013 2016 Loan Loss Loan Loss $54.2 Mix(1) rate Mix(1) rate $51.3 $46.7 $48.1 Auto 19% 0.06% 26% 0.68% 97% 95% Core home equity 44 0.66 30 0.15 91% 94% Core resi mortgage 18 0.38 25 0.08 Education
Slide 29: Diversified and granular loan mix
Diversified and granular loan mix $57.2 billion $51.9 billion 2Q17 retail portfolio 2Q17 commercial portfolio Business Non-Core Banking Non-Core Other Out of 26% Leases 2% Out of Education Finance 4% 2% Home footprint(1,2) 5% 34% Equity 5% footprint(1,2) 13% 27% 13% Midwest Credit Cards 3% 13% Midwe
Slide 30: Auto portfolio credit metrics
Auto portfolio credit metrics Highlights(1) 2Q17 $13.4 billion Auto portfolio Auto Finance portfolio – purchase only, no by Refreshed FICO score (1,2) by Origination LTV (2) leasing, weighted-average FICO score of 729 < 620 % new car ≥ 120% ≤ 80% − 2Q17 originations of $1.3 billion with > 800 8% 6
Slide 31: Core education finance portfolio overview
Core education finance portfolio overview Highlights 2Q17 $7.4 billion core education finance portfolio Core education finance portfolio average FICO score of 776 (1) by Refreshed FICO by Segment (1) and co-sign rate of 46% 95% of InSchool loans co-signed with average FICO of 774 > 800 35% < 620
Slide 32: Education refinance portfolio overview
Education refinance portfolio overview Highlights 2Q17 $5.1 billion education refinance portfolio Education refinance product largely mitigates two greatest student by Portfolio lending risks: Citizens − Did the borrower graduate? ERL 60% − Did the borrower gain employment? Education refinance p
Slide 33: Consumer unsecured
Consumer unsecured* Highlights 2Q17 $1.5 billion consumer unsecured portfolio Launched merchant partnership financing in 3Q15 $s in millions $1,456 Developing strategic partnerships designed around high-quality merchant partnership offerings $1,216 $1,049 − Partnerships utilize loss-sharing arra
Slide 34: Core commercial portfolio overview
Core commercial portfolio overview Highlights 2Q17 $51.0 billion core commercial portfolio Asset quality relatively stable and has reached by Industry Sector(1) pre-crisis levels All Others (3) Arts, Entertainment, and Recreation Overall credit risk is moderate and compares well Automotive 5% Re
Slide 35: Shared National Credit portfolio overview
Shared National Credit portfolio overview Highlights 2Q17 $23.2 billion SNC portfolio Shared National Credit (SNC) portfolio of $23.2 billion in by Geography Out of outstanding balances footprint Mid- TX 7% − Well-diversified portfolio with average outstanding loan Out of Atlantic CA 7% balance of
Slide 36: 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 QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 4Q16 3Q16 2Q16 1Q17 2Q16 2017 2016 2016 $ % $ % $ % Noninterest inc ome, Adjusted: Noni
Slide 37: 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 QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 4Q16 3Q16 2Q16 1Q17 2Q16 2017 2016 2016 $/bps % $/bps % $/bps % Operating leverage: Tot
Slide 38: 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 QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 4Q16 3Q16 2Q16 1Q17 2Q16 2017 2016 2016 $/bps % $/bps % $/bps % Tangible book value per
Slide 39: 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 QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 4Q16 3Q16 2Q16 1Q17 2Q16 2017 2016 2016 $ % $ % $ % Other income, Adjusted Other income
Slide 40: 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 FOR THE Y EA R ENDED DECEMBER 31, 2016 2015 2014 No ninterest inc o me, A djusted: Noninterest income (GAAP) $1,497 $1,422 $1,678 Less: Restructuring charges and special it
Slide 41: Non-GAAP reconciliation - segments
Key performance metrics, Non-GAAP financial measures and reconciliation - segments $s in millions, except ratio data THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED MA R 31, 2017 2017 Consumer Commerc ial Consumer Commerc ial Banking Banking Other Consolidated Banking Banking Other Consolidated Net i
Slide 42: Non-GAAP reconciliation – segments
Key performance metrics, Non-GAAP financial measures and reconciliation – segments $s in millions, except ratio data THREE MONTHS ENDED DEC 31, THREE MONTHS ENDED SEPT 30, 2016 2016 Consumer Commerc ial Consumer Commerc ial Banking Banking Other Consolidated Banking Banking Other Consolidated Net in
Slide 43: Non-GAAP reconciliation – segments
Key performance metrics, Non-GAAP financial measures and reconciliation – segments $s in millions, except ratio data THREE MONTHS ENDED JUNE 30, 2016 Consumer Commerc ial Banking Banking Other Consolidated Net inc ome available to c ommon stoc kholders: Net income (loss) (GAAP) A $90 $164 ($11) $243
Slide 44: Non-GAAP reconciliation – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliation – Underlying results $s in millions, except share, per share and ratio data QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 2Q16 1Q17 2Q16 2017 2016 2016 $/bps % $/bps % $/bps % Noninterest i
Slide 45: Non-GAAP reconciliation – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliation – Underlying results $s in millions, except share, per share and ratio data QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 2Q16 1Q17 2Q16 2017 2016 2016 $/bps % $/bps % $/bps % Operating lev
Slide 46: Non-GAAP reconciliation – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliation – Underlying results $s in millions, except share, per share and ratio data QUARTERLY TRENDS FOR THE SIX MONTHS ENDED JUNE 30, 2Q17 Change 2017 Change 2Q17 1Q17 2Q16 1Q17 2Q16 2017 2016 2016 $/bps % $/bps % $/bps % Return on ave
Slide 47: Key performance metrics, Non-GAAP financial measures and reconciliation
Key performance metrics, Non-GAAP financial measures and reconciliation $s in millions, except share, per share and ratio data FOR THE THREE MONTHS ENDED JUN. 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, 20
Slide 48: Citizens Financial Group, Inc.
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