Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Morgan Stanley US Financials, Payments & CRE Conference 2022
24 slides from Citizens Financial's conference presentation, Jun 14, 2022
Slide 1: Morgan Stanley US Financials, Payments & CRE Conference
Morgan Stanley US Financials, Payments & CRE Conference June 14, 2022 John F. Woods Vice Chairman and Chief Financial Officer Brendan Coughlin Head of Consumer Banking
Slide 2: Forward-looking statements
Forward-looking statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends as well as the potential effects of the COVID-19 disruption and Russia
Slide 3: Strong franchise in attractive markets with diversified business model
Strong franchise in attractive markets with diversified business model – Transformed bank since IPO; focus on attractive customer segments – Digital‐first national Consumer bank; deepening relationships with differentiated capabilities – Commercial focused on high growth sectors; strongly positioned
Slide 4: Positive outlook for Citizens
Positive outlook for Citizens Strong performance, positioning and momentum NII benefitting from strong loan growth and higher rate environment – Emphasizing relationship‐oriented commercial loan growth with attractive risk‐adjusted returns – Managing a more predictable and stable outlook for NII and
Slide 5: Strong loan growth led by Commercial will help drive NII
Strong loan growth led by Commercial will help drive NII Emphasizing strong relationships and risk-adjusted returns Positive utilization trends (Average) 2022 growth emphasis Total Commercial Expecting higher loan growth in Commercial while being more selective in Consumer; relationship focus to o
Slide 6: NIM expansion supported by significantly improved deposit franchise
NIM expansion supported by significantly improved deposit franchise Higher-quality deposit mix this rate cycle expected to result in a more peer-like IBD beta (Total average deposits, $s in billions) 3Q15 4Q21 $101 $153 Mid/higher beta categories(1) ~50 to 70% beta o Commercial – IB deposits 44% o
Slide 7: Taking steps to stabilize and protect NII while benefiting from rising rates
Taking steps to stabilize and protect NII while benefiting from rising rates Cash flow receive fixed swap Interest rate risk management update hedging actions QTD* ($s in billions) ■ NII continuing to benefit from further rate Forward increases since April 2022 Spot starting Total ■ Have started to
Slide 8: Diversified business model positioned to perform well in a challenging macroeconomic environment
Diversified business model positioned to perform well in a challenging macroeconomic environment Noninterest income Commentary ($s in millions) Solid fee performance reflects an increasingly diversified business model ─ Multi-year investments in fee capabilities; selective acquisitions ─ Significa
Slide 9: Intense focus on expense discipline and efficiency initiatives
Intense focus on expense discipline and efficiency initiatives Successful execution of TOP programs key to self-funding strategic investments TOP program making progress Enterprise and business initiatives ($s in millions) ■ Further simplify organizational structure ~$425 ■ Optimize procurement/vend
Slide 10: Delivering a customer-focused, adaptable, resilient and secure technology environment
Delivering a customer-focused, adaptable, resilient and secure technology environment Enhanced engineering talent and tools • In 2020, launched robust set of tech academies and credentialing to build engineering, Objectives infrastructure, solution architecture skillsets Upskilled ~250 colleagues
Slide 11: Credit portfolio quality continues to improve
Credit portfolio quality continues to improve (Portfolio data as of March 31, 2022) Retail portfolio FICOs Commercial portfolio risk ratings ($s in billions) ($s in billions) $61.6 $69.8 $57.5 $61.5 <640 B- and lower 640-679 B+ to B 680-739 BB+ to BB- 740-799 AAA+ to BBB- 800+ Super prime/prime focu
Slide 12: Leading indicators of credit remain favorable
Leading indicators of credit remain favorable Criticized Commercial indicators positive ($s in millions) 6.8% 7.2% 7.0% 5.4% 5.1% ■ 1Q22 classified loans 2.9% of commercial loans, down from 3.8% in 1Q21 and 3.3% in 4Q21 $4,109 $4,247 $4,072 ■ ISBC portfolio credit is stable $3,265 $3,145 3.1% ■ Comp
Slide 13: Credit performance better than or in-line with peer average
Credit performance better than or in-line with peer average 2.0% Total NPL vs. peers(1) Classified vs. peers(1) 5.0% 1.5% 4.5% 1.0% 4.0% 3.5% 0.5% 3.0% 0.0% 2.5% 2.0% CFG Total Peer Total 1.5% 1.0% Commercial NPL vs. peers(1) 0.5% 2.0% 0.0% 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20
Slide 14: Consumer Banking – transformed franchise with a strong foundation
Consumer Banking – transformed franchise with a strong foundation 2015 Today Growing low-cost deposits; Recognition ■ Below-peer growth Deposit franchise dramatically remixed to low ■ Higher cost/high beta cost/lower beta Citizens PayTM ■ Mortgage - undersized Leading national lending Best Innovatio
Slide 15: Consumer Bank achieving greater scale with strong momentum
Consumer Bank achieving greater scale with strong momentum Customer growth(1) Checking customer growth(1) Leveraging benefits of scale (in millions) (in millions) 6.2 +14% 2.5 ■ Investing in technology modernization +82% 2.2 ■ Increasing brand and marketing spend 3.4 3.9 critical for customer acquis
Slide 16: Transformed retail customer base results in a higher-quality deposit franchise
Transformed retail customer base results in a higher-quality deposit franchise Key drivers improving deposit betas ~25-30% versus prior cycle 1 2 3 Scale of customer base Customer engagement Customers’ price sensitivity More Greater Improved Transformed customers engagement capabilities portfolio Ne
Slide 17: Retail credit performance
Retail credit performance Credit losses remain at ~50% of pre-Covid averages, with unsecured growth products performing significantly better than prime-focused card Retail NCO ratio Commentary 0.52% 0.44% Retail credit portfolios are prime/super 0.28% prime, and continue to show suppressed 0.25% l
Slide 18: HELOC – FastLine experience
HELOC – FastLineTM experience We continue to innovate in areas that strengthen our customer strategy Citizens FastLine™ Resulting in… Industry-leading HELOC journey enabled by $8.0 advanced analytics and digital innovation HELOC(1) $4.7 originations #1 in industry ($s in billions) 2020 2021 35% Incr
Slide 19: Consumer strategic growth and profitability initiatives
Consumer strategic growth and profitability initiatives Focused on five key areas that will drive outsized revenue growth in the medium term Strategic priorities Progress made Focus for next 12 months HSBC conversion complete ISBC integration Former HSBC branches outperforming CFG Multi-chan
Slide 20: Driving digital engagement while transforming branch network and modernizing the core
Driving digital engagement while transforming branch network and modernizing the core Digital engagement Advice-focused branch network ~2.4MM ~$149MM Transforming our Digital active Total spend users via digital wallet branch network to 32% YoY 34% YoY advice-centers ~1.9MM ~193K ~70% of customers v
Slide 21: Appendix
Appendix Po 4 ak | 21
Slide 22: Commercial Banking - broadening capabilities and strengthening execution
Commercial Banking - broadening capabilities and strengthening execution Strategic Priorities Transformed business since IPO Delivering results Significant talent, capabilities investments Capital and Global Markets fees Strengthened corp finance, M&A advisory up 84% ‘18-‘21 Deepening relation
Slide 23: Notes
Notes General Notes a) References to net interest margin are on a fully taxable equivalent ("FTE") basis. In 1Q19, Citizens changed its quarterly presentation of net interest income and net interest margin (NIM). Consistent with our understanding of general peer practice, the Company simplified the
Slide 24: Citizens Financial Group, Inc.
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