Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Goldman Sachs US Financial Services Conference 2017
31 slides from Citizens Financial's conference presentation, Dec 6, 2017
Slide 1: Goldman Sachs US Financial Services Conference 2017
Goldman Sachs US Financial Services Conference 2017 John F. Woods Chief Financial Officer December 6, 2017 Exhibit 99.1
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: 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% in top 10 MSAs(2) #2 deposit market share in New England(2) Diverse economies/affluent demographics Serve 5 million+ individuals, institutions and companies 2.6 million r
Slide 4: Substantial progress in prudently growing the balance sheet
Consumer Substantial progress in prudently growing the balance sheet Dimension(1) Rank(2) Assets: $151.4 billion #12 Loans: $110.2 billion(3) #11 Deposits: $113.2 billion #12 nationally; Top 5 rank in 9/10 markets(4) Mortgage: $16.6 billion #13 nationally(5) Education: $8.0 billion Top 4 rank nation
Slide 5: Making consistent progress against our financial goals
1.0%+ Efficiency ratio(1) ~60% 10%+ Making consistent progress against our financial goals ROTCE(1) (Return on average tangible common equity) (2) Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in the appendix of this presentation for
Slide 6: Turning the corner — elevated our mission & sharpened how we will differentiate
Turning the corner — elevated our mission & sharpened how we will differentiate To help our customers, colleagues and communities reach their potential Expertise and deep knowledge of customers High-quality advice Team approach Insights from data and analytics Focus on customer journeys Selective in
Slide 7: Further opportunities to improve returns
Further opportunities to improve returns Continuous improvement – TOP programs Balance Sheet Optimization (BSO) Growth in fee income businesses Capital management Potential tax reform Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in
Slide 8: Further opportunities to improve returns: TOP
Further opportunities to improve returns: TOP Continuous improvement - TOP programs Self-fund investments through efficiency, expense discipline and mindset of continuous improvement Use new technologies to deliver more effective outcomes at lower costs TOP IV program targeting run-rate pre-tax bene
Slide 9: Further opportunities to improve returns: BSO
Further opportunities to improve returns: BSO Balance Sheet Optimization (“BSO”) Improve risk-adjusted returns and NIM while driving growth Enterprise-wide initiative with the same intensity and rigor as our TOP efficiency programs Recycle capital into more accretive growth and relationship categori
Slide 10: Entering next phase of balance sheet optimization
Entering next phase of balance sheet optimization IPO Today Target Assets Loan growth well above nominal GDP Aligned incentives and pricing economics Loan growth modestly ahead of nominal GDP More rigorous approach to recycling capital ~½ of the 21bps improvement in NIM 3Q17 YoY due to mix Continue
Slide 11: Evaluation of loan portfolio
Low High Home Equity Organic Auto Mid-Corporate Purchased Retail Industry Verticals Business Banking Personal Unsecured Potential to develop primary bank relationships Low Medium High Portfolio Mortgage Middle Market CRE Organic Student Franchise Asset Finance (Front Book) Salable Mortgage Asset Fin
Slide 12: Evaluation of deposits
Medium Treasury Strategic value Low High Consumer MMKT Consumer and Commercial DDA Consumer CWI Personal Savings Commercial CWI Commercial MMKT Consumer Relationship CDs Pooled Government* FI Government DDA Promo Consumer CD Note: Size of bubble denotes 2017 estimated deposit concentration *Does not
Slide 13: Strong deposit base, with opportunities to grow stable deposits cost-effectively
Strong deposit base, with opportunities to grow stable deposits cost-effectively Data & analytics drive holistic and personalized customer targeting models across all programs and products Executing targeted mobile and online digital customer acquisition Utilizing targeted direct-mail offers in lieu
Slide 14: Remain rate sensitive
Remain rate sensitive Net interest income positioned to continue to benefit from rising rates Our asset sensitivity has remained relatively stable at 5.4% Interest rate sensitivity trend Interest rate sensitivity ranking (200 bps gradual increase) Note: CFG data as of 3Q17. Peer data from SNL as of
Slide 15: Further opportunities to improve returns: Growth in fee income businesses
Further opportunities to improve returns: Growth in fee income businesses Fee income Wealth Investments in FCs and sales, technology platforms and products with shift toward managed money SpeciFi™ robo-advisor product Business Banking Fundation FinTech partnership to automate small business underwri
Slide 16: Focus on growing fee income delivering steady progress
$381 (1) YoY fee income growth Focus on growing fee income delivering steady progress Wealth fees: Fee-based sales 41% for 3Q17. Enhanced client targeting should drive additional growth Mortgage fees: Seeing success in shifting conforming mix to 41% in 3Q17 with more opportunity to improve. Expect t
Slide 17: Further opportunities to improve returns: Capital management
Source: SNL Financial. Data as of 3Q17. Based on regulatory data. Per the final transition provision rule issued by banking regulators on November 21, 2017, U.S. Basel III ratio definitions impacting risk weighted assets and qualifying U.S. Basel III Capital will be fully phased in as of January 1,
Slide 18: Implications of potential tax reform
Implications of potential tax reform Potential tax reform Proposed tax changes are estimated to have a significant positive impact on our results when enacted into law Assuming a January 1, 2018 effective date: Estimated mid-to-high teens percentage increase in pro forma FY2018 net income and EPS re
Slide 19: Key messages
Key messages Citizens 3Q17 results highlight disciplined execution and continued momentum Exceeded IPO medium-term targets of 10% ROTCE and 60% efficiency ratio(1) Delivered EPS growth of 21% YoY, 31% on Adjusted basis;(1) YTD 2017 YoY Adjusted growth of 38% Operating leverage of 6% YoY, 7% on Adjus
Slide 20: Appendix
Appendix Xx Citizens nancial Group,
Slide 21: TOP IV initiatives ramping up and making good progress
Organization Simplification: savings identified through shadow role elimination, rightsizing and “gearing”, and other operational efficiencies; moving to implementation across businesses Lean/Process Improvement: lean engineering team hired; sprints underway for risk/compliance and end-to-end Commer
Slide 22: At Citizens, we continue to smartly grow our balance sheet
At Citizens, we continue to smartly grow our balance sheet á 22% Good loan growth with rising yields Return on loan book regulatory capital improving(2) Stress losses as a % of loans down(3) Total loans(1) $ billions Average loan balances. Reflects after-tax return calculated as loan interest income
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 KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (CONTINUED) (in millions, except share, per-share ratio data) QUARTERLY TRENDS FOR THE NINE MONTHS
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 KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (CONTINUED) (in millions, except share, per-share ratio data) QUARTERLY TRENDS FOR THE NINE MONTHS
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 1 Per the final transition provision rule issued by banking regulators on November 21, 2017, U.S. Basel III ratio definitions impacting risk weighted assets and qualifying
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 3Q17 2Q17 1Q17 4Q16 3Q16 2017 2016 $ % $ % $ % Other income, Adjusted Other income (GAAP) $18 $2 $24 $25 $87 $16 NM ($69) (79%) $44 $122 ($78) (64%) Less: Notable items — —
Slide 27: Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results $s in millions, except share, per share and ratio data KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS - UNDERLYING RESULTS (in millions, except share, per-share ratio data) QUARTER
Slide 28: Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results $s in millions, except share, per share and ratio data KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS - UNDERLYING RESULTS (in millions, except share, per-share ratio data) QUARTER
Slide 29: Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying results $s in millions, except share, per share and ratio data KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS - UNDERLYING RESULTS (in millions, except share, per-share ratio data) QUARTER
Slide 30: 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 KEY PERFORMANCE METRICS, NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (CONTINUED) (in millions, except share, per-share and ratio data) FOR THE THREE MONTHS ENDED SEP. 3
Slide 31: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Goldman Sachs US Financial Services Conference 2017 on 6ix