Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2023
33 slides from Citizens Financial's conference presentation, Sep 11, 2023
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference September 11, 2023 John Woods Vice Chairman and Chief Financial Officer Brendan Coughlin Vice Chairman and Head of Consumer Banking
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 state
Slide 3: Navigating well through a dynamic environment
Navigating well through a dynamic environment Citizens has performed well since the IPO given a sound strategy, capable and experienced leadership and a strong customer-focused culture – Track record of strong execution – Commitment to operating and financial discipline – Excellence in our capabilit
Slide 4: Strong franchise with leading positions in attractive markets
Strong franchise with leading positions in attractive markets Highlights Attractive footprint with large mass-affluent and affluent segments All-time high customer satisfaction in Consumer and Commercial Customer Assets under growth(1) management In millions growth $s in billions Strong league table
Slide 5: Strong 2Q23 capital and liquidity performance and momentum
Strong 2Q23 capital and liquidity performance and momentum $ in billions CET1 Ratio Loans-to-deposit ratio 90% 10.3% 85% 10.0% 9.6% 1Q23 2Q23 Peer Median 1Q23 2Q23 Period Ending Strong absolute and relative capital position Improved loans-to-deposit ratio Strong spot deposit growth % Insured/secured
Slide 6: Highly diversified and retail-oriented deposit base
Highly diversified and retail-oriented deposit base $178B Period-end deposits Business mix (As of 6/30/23) Product mix Wealth 1% Business Term Citizens Banking 11% Access™ 13% Demand Commercial 6% 27% Savings 23% 10% Citizens Access™ Savings 6% Treasury/ Checking Other with interest Branch 7% 20% Mo
Slide 7: CFG's strong capital position relative to peers
CFG’s strong capital position relative to peers CET1 ratio CET1 ratio adjusted for AOCI (2Q23)(1) opt-out removal (2Q23)(2) Peer 1 10.6% Peer 1 10.2% CFG 10.3% CFG 8.5% Peer 2 10.3% Peer 2 7.7% Peer 3 10.1% Peer 3 7.7% Peer 4 9.8% Peer 4 7.5% Peer 5 9.6% Peer 5 6.8% Peer 6 9.5% Peer 6 6.8% Peer 7 9.
Slide 8: Well positioned for new regulations - Capital
Well positioned for new regulations - Capital AOCI opt-out removal impact Basel III Endgame RWA impacts ■ CET ratio of 10.3% among the highest within peer group ■ Expect RWA increase of ~4% on a fully-phased in ■ CET1 ratio adjusted for AOCI opt-out removal of 8.5% basis based on initial assessment
Slide 9: Well positioned for new regulations - Liquidity
Well positioned for new regulations - Liquidity Improving liquidity profile Anticipating new requirements ■ High-quality deposit base provides a strong ■ Awaiting clarity on new rules for Category IV foundation for liquidity banks regarding liquidity coverage ratio – 70% insured/secured(1); ~67% Con
Slide 10: Well positioned for new regulations - Long-term debt requirements
Well positioned for new regulations - Long-term debt requirements Commentary Expected financial impacts ■ Would expect to meet proposed long-term ■ 2Q23 pro forma impact from incremental debt requirements with programmatic issuance issuance expected to be $0.04-$0.08 per share over multiple year pha
Slide 11: Key strategic initiatives
Key strategic initiatives I Balance Sheet Optimization (BSO) and evolving regulations II Citizens Private Bank III New York City Metro IV Citizens Access/Citizens Pay V Capturing the Private Capital opportunity VI TOP 8/9 We continue to invest in a series of unique initiatives that position Citizens
Slide 12: I. BSO actions to further strengthen capital & liquidity, improve returns
I. BSO actions to further strengthen capital & liquidity, improve returns Immediately accretive to NIM, ROTCE and EPS $s in billions ~$13.7 billion Non-Core portfolio Non-Core High-cost portfolio funding ~$9.2B reduction $13.7 $13.7 expected by end of 2025; opportunistic $3.3 $11.1 sales may acceler
Slide 13: I. BSO actions to further strengthen capital & liquidity, improve returns
I. BSO actions to further strengthen capital & liquidity, improve returns $s in billions Strategic remixing of the balance sheet $13.7B Non-Core portfolio Redeployment through run-off through YE2025 YE2025 in Legacy Core $9.2 $9.2 ~25% ~25% ~50% Loan reduction Funding pay-down through FY2025 Strateg
Slide 14: II. Building Private Banking capabilities
II. Building Private Banking capabilities Boosts growth plans in Wealth Management and Business Banking Private Banking coverage in Launch of Citizens Private Bank key geographies ■ Hired ~50 senior bankers and ~100 support Added ~50 senior private bankers and ~100 related support staff in staff; ad
Slide 15: Introducing: Citizens Private Bank
II. Building Private Banking capabilities Introducing: Citizens Private Bank Building an extraordinary experience for HNW clients Building a world-class World-class client experience integrated operating model ■ Unparalleled client service ■ Banker empowerment to deliver an extraordinary client serv
Slide 16: II. Building Private Banking capabilities
II. Building Private Banking capabilities Core business principles to build a durable, profitable, and successful franchise ■ Primary banking relationship focus ■ Pristine credit risk profile ■ Build a strong, self-funding deposit base ■ Profitability-focused relationship-based pricing ■ Compensatio
Slide 17: II. Building Private Banking capabilities
II. Building Private Banking capabilities A focused client strategy to take market share in the recently disrupted HNW space Businesses Individuals Companies that skew HNW employees HNW and high-potential clients and clients Target verticals Target clients ■ Private Equity ■ >$5mm liquid assets ■ Ve
Slide 18: II. Building Private Banking capabilities
II. Building Private Banking capabilities Next steps to deliver a world-class Private Bank ■ Launch brand in 4Q23 ■ Scale Wealth offering and advisers ■ Open select private banking offices/branches ■ Make operating model changes to deliver a world-class customer experience Medium-term aspirations Fi
Slide 19: Investment thesis
Investment thesis Citizens has a robust capital, liquidity and funding position – Committed to strengthening even further with BSO, including Non-Core strategy – Relative strength allows Citizens to take advantage of opportunities – Focused on deploying capital to best relationship/highest risk adju
Slide 20: Appendix
Appendix 20
Slide 21: III. Entry into New York Metro progressing well
III. Entry into New York Metro progressing well ~200 branches acquired, ~1 million customer accounts migrated, ~1,350 business clients Strong start with potential to scale over time Sizeable growth potential 30+ points NPS Strong branch sales 3 to 5 years of strong sales improvement +175% to close t
Slide 22: IV. Consumer Banking - differentiated growth opportunities
IV. Consumer Banking - differentiated growth opportunities Citizens AccessTM CitizensPayTM $s billions National digital expansion Top customer acquisition engine Strong source of deposit growth in the bank Period-end balance $10.6 $7.8 Existing clients Prudently adding performing well new clients 4Q
Slide 23: V. Capturing the Private Capital opportunity
V. Capturing the Private Capital opportunity A substantial and growing market Citizens serving Private Capital for 10 years Citizens has been cultivating distinctive capabilities to Over the last six years, Private Capital serve the Private Capital ecosystem fundraising has led to record deal format
Slide 24: VI. Transforming how we operate the bank and deliver for customers
VI. Transforming how we operate the bank and deliver for customers TOP program benefits TOP Update $s in millions ■ TOP 8 underway and progressing well ~$425 ■ In light of the environment, augmented the program and raised target benefit to ~$115 million from ~$100 million ■ Incremental efficiencies
Slide 25: $78.3B Commercial credit portfolio
$78.3B Commercial credit portfolio Diverse and granular portfolio Commercial portfolio risk ratings(2) $s in billions % of Balances total CFG ($ in billions) C&I $57.5 $80.9 $78.3 Finance and Insurance B- and lower 3% 6% 6% B+ to B 14% 16% Capital call facilities $ 6.3 4% 15% Other Finance and Insur
Slide 26: Strong reserve coverage of CRE General Office
Strong reserve coverage of CRE General Office General Office portfolio - ACL coverage Commentary $ in billions ■ Strong ACL coverage of General Office; continually reassessing potential loss content based on detailed loan by loan portfolio $4.0 $4.1 review as market conditions evolve $3.9 – Increase
Slide 27: $73.0B Retail credit portfolio
$73.0B Retail credit portfolio Retail loans(1) High quality, diverse portfolio Other retail ■ Mortgage – FICO ~785 Education - 7% Residential – Weighted-average LTV of ~55% refinance mortgages ■ Home equity – FICO ~765 13% – ~40% secured by 1st lien Education - 42% – ~96% CLTV less than 80% in schoo
Slide 28: Well positioned to meet future long-term debt requirements
Well positioned to meet future long-term debt requirements $s in millions Diversified Funding Platforms and Balanced Maturity Profile Historical Citizens Fixed Income and ABS Issuance # of Issuances Per Year 4 3 3 3 4 4 2 3 2 $750 $750 $400 $350 $621 $250 $3,250 $500 $1,000 $1,050 $1,500 $1,750 $600
Slide 29: Capital remains strong
Capital remains strong Capital stack comparison(1) Peer 1 10.6% 1.3% 1.8% 13.7% Peer 2 10.3% 0.5% 2.0% 12.8% CFG 10.3% 1.1% 1.9% 13.3% Peer 3 10.1% 1.3% 1.8% 13.1% Peer 4 9.8% 1.8% 2.2% 13.8% Peer Avg 9.7% 1.4% 2.0% 13.1% Peer 5 9.6% 1.5% 2.1% 13.2% Peer 6 9.5% 1.7% 1.9% 13.1% Peer 7 9.5% 1.2% 2.1%
Slide 30: High-quality investment portfolio
High-quality investment portfolio $s in billions Investment portfolio Highlights $36.1 $36.6 $2.2 $2.0 ■ 95% U.S. Treasury and Government/Agency $3.5 $3.4 MBS $9.0 ■ 72% AFS securities, 28% HTM securities $8.9 ■ 5% private label ■ 19% of total earning assets $21.6 $22.2 ■ Primary goal is to provide
Slide 31: 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 32: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except ratio data QUARTERLY TRENDS 2Q23 CET1 Ratio adjusted for AOCI opt-out removal CET1 capital $18,381 Less: AFS securities - AOCI 1,763 HTM securities - AOCI 880 DTA for AFS/HTM securities 24 Pension 367 DTA for Pension 2 CET 1 capi
Slide 33: Citizens Financial Group, Inc.
3< Citizens Financial Group, Inc.”
Citizens Financial Group — Barclays Global Financial Services Conference 2023 on 6ix