Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q1 2018 Earnings Presentation
26 slides from Citizens Financial's earnings presentation, Apr 20, 2018
Slide 1: 1Q18 Financial Results
1Q18 Financial Results April 20, 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: 1Q18 highlights
1Q18 highlights Net income available to common of $381 million up 22% YoY, 31% on an Underlying basis.(1) Diluted EPS of $0.78 up 28%, 37% on an Underlying basis. ─ Given 4Q17 $317 million net after-tax benefit of notable items primarily tied to 2017 Tax Legislation, net income and EPS down 42% Qo
Slide 4: GAAP financial summary
GAAP financial summary 1Q18 change from Highlights $s in millions 1Q18 4Q17 1Q17 4Q17 1Q17 Linked quarter: $ % $ % Net interest income $1,091 $1,080 $1,005 $ 11 1% $ 86 9% Net income available to common stockholders down Noninterest income 371 404 379 (33) (8) (8) (2) $285 million, or 43%, and EPS
Slide 5: 1Q18 Underlying financial summary
1Q18 Underlying financial summary(1) Highlights 1Q18 change from Linked quarter: 1Q18 4Q17 1Q17 4Q17 1Q17 $s in millions Reported Underlying (1) Underlying (1) Underlying (1) Underlying (1) Underlying net income available to common stockholders(1) of $381 million increased $32 million, or Net inte
Slide 6: Net interest income
Net interest income $s in millions, except earning assets Net interest income Highlights $136.4B $137.6B $137.5B $138.4B $138.7B Linked quarter: NII up $11 million, or 1% ─ Reflects an 8 bp increase in NIM and 1% loan growth, partially offset by decrease tied to day count NIM of 3.16% up from 3.
Slide 7: Noninterest income
Noninterest income $s in millions Highlights 1Q18 change from Linked quarter: 1Q18 4Q17 1Q17 4Q17 1Q17 Noninterest income decreased $33 million, reflecting $ % $ % $17 million impact of 4Q17 notable items Service charges and fees $ 124 $ 131 $ 125 $ (7) (5) % $ (1) (1) % ─ Down $16 million on an U
Slide 8: Noninterest expense
Noninterest expense $s in millions Highlights 1Q18 change from Linked quarter: 1Q18 4Q17 1Q17 4Q17 1Q17 Noninterest expense down $15 million, driven by a $ % $ % $40 million decrease tied to notable items Salaries and benefits $ 470 $ 450 $ 446 $ 20 4% $ 24 5% ─ On an Underlying basis,(1) noninter
Slide 9: Average Loans and Leases
Average Loans and Leases Average core loans and leases YoY Loan Highlights Growth Total Core Linked quarter: $107.3B $108.4B $109.2B 4% Average core loans and leases up $686 million, or 1%; $105.5B $106.8B up 1% on a period-end basis ─ Core retail loans up $431 million, or 1%, largely reflecting
Slide 10: Average funding and cost of funds
Average funding and cost of funds $s in billions Average interest-bearing liabilities and DDA Highlights $127.5B $127.5B $128.6B $129.1B Linked quarter: $126.2B Total average deposits remained relatively stable despite $13.6 $12.2 $11.7 $13.5 Total long-term borrowings $12.4 seasonality $2.4 $3.1
Slide 11: Strong credit-quality trends continue
Strong credit-quality trends continue $s in millions Highlights Provision for credit losses, net charge-offs Overall credit quality remains strong, reflecting growth in lower-risk retail portfolios and a stable risk profile in commercial $96 $87 $83 NPLs to total loans and leases ratio of 0.78%
Slide 12: Capital and liquidity remain strong
Capital and liquidity remain strong Highlights as of Capital levels remain at the higher end of the range for $s in billions (period-end) 1Q17 2Q17 3Q17 4Q17 1Q18 regional peers Basel III basis(1) Common equity tier 1 capital $ 13.9 $ 14.1 $ 14.1 $ 14.3 $ 14.4 1Q18 CET1 ratio of 11.2% stable com
Slide 13: Strategic initiatives update
Strategic initiatives update NIM up 20 bps YoY with ~7 bps due to our overall Strategic & business highlights Balance Sheet Optimization BSO efforts Grow higher risk-adjusted Core Education, personal unsecured and merchant return portfolios financing up 35% YoY; renewed SOFI flow agreement CRE
Slide 14: 2Q18 outlook
2Q18 outlook 1Q18 2Q18 expectations vs. 1Q18 Net interest $111.8 billion average loans ~1.5% average loan growth income, net 3.16% NIM NIM up modestly reflecting benefit of higher short-term interest margin rates, partially offset by modest curve flattening Noninterest $371 million Up ~5
Slide 15: Key messages
Key messages Citizens 1Q18 results highlight disciplined execution and continued momentum ─ Delivered EPS growth of 28% YoY, 37% on Underlying basis(1) ─ 11.7% ROTCE and 60% efficiency ratio(1) ─ Operating leverage of 2.1% YoY(1) ─ Continuing to execute well on TOP programs Robust balance sheet
Slide 16: Appendix
Appendix %£ Citizens Financial Group, Inc” 16
Slide 17: Notable items
Notable items Notable items(1) 4Q17 1Q17 ($s in millions, except per share data) Pre-tax After-tax EPS impact Pre-tax After-tax EPS impact Tax Legislation DTL adjustment $ — $ 331 $ 0.67 Colleague bonus - Salaries & benefits (12) (7) (0.02) Foundation grant - Other expense (10) (6) (0.01) Net Tax Le
Slide 18: Making consistent progress against our financial goals
Making consistent progress against our financial goals Medium-term Key Indicators targets 11.7% ~13 - 15% 10.1% 10.4% Adjusted/ 7.3% 8.0% 8.4% 9.0% 9.6% Underlying 6.3% 6.2% 6.8% 6.7% 6.7% 6.6% 6.8% 6.6% 4.3% 5.2% 5.2% ROTCE(1) Adjusted/ Underlying 68% 69% 70% 68% 68% 67% 68% 67% 66% 66% 66% 65% eff
Slide 19: Year-over-year results
Year-over-year results Average loans(1) Average deposits Pre-provision profit $s in billions $s in billions $s in millions $111.8 3% $110.0 $113.4 3% $579 9% $108.6 $530 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 Net income available to Return on average total Return on average tangible common shareholders
Slide 20: Linked-quarter results
Linked-quarter results Average loans(1) Average deposits Pre-provision profit $s in billions $s in billions $s in millions $111.8 1% $113.8 $113.4 $609 $111.2 $579 1% $586 Underlying 5% 4Q17 1Q18 4Q17 1Q18 4Q17 1Q18 Net income available to Return on average total Return on average tangible com
Slide 21: 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 21
Slide 22: 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 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 23
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 FOR THE THREE MONTHS ENDED DEC. SEP. 30 JUN. 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, 2017 2017 2017 2017 2016 2016 2016 2016 Total revenue, Adjusted/Underly ing: T
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 FOR THE THREE MONTHS ENDED DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, 2015 2015 2015 2015 2014 2014 2014 2014 2013 2013 Total
Slide 26: Citizens Financial Group, Inc.
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