Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q2 2018 Earnings Presentation
29 slides from Citizens Financial's earnings presentation, Jul 20, 2018
Slide 1: 2Q18 Financial Results
2Q18 Financial Results July 20, 2018 Exhibit 99.2
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: 2Q18 highlights
Provision expense of $85 million, including a $9 million reserve build, compared to $78 million in 1Q18 and $70 million in 2Q17, or $96 million of credit-related costs on an Underlying basis(1) Overall credit quality remains strong; NPLs 75 bps of loans, down 3 bps QoQ and 19 bps YoY NPL coverage ra
Slide 4: GAAP financial summary
GAAP financial summary Please see important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their reconciliation to GAAP financial m
Slide 5: Underlying financial summary: linked quarter and prior-year quarter
Linked quarter: Net income available to common stockholders up $44 million, or 12%, and EPS up $0.10, or 13% ROTCE improved 122 bps(1) NII up $30 million, or 3%, reflecting 2% average loan growth and a 2 bp improvement in NIM, given higher rates and improved loan mix Noninterest income increased $17
Slide 6: Net interest income
Highlights Net interest income Linked quarter: NII up $30 million, or 3% Reflects 2% average loan growth, a 2 bp increase in NIM and the benefit of day count NIM of 3.18% up from 3.16% Reflects higher loan yields tied to higher interest rates, partially offset by increased deposit and funding costs
Slide 7: Noninterest income
Note: Other income includes bank-owned life insurance and other income. Please see important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial meas
Slide 8: Noninterest expense
$s in millions Noninterest expense Please see important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their reconciliation to GAAP
Slide 9: Average Loans and Leases
Average Loans and Leases Linked quarter: Average core loans and leases up $1.8 billion, or 2% Core retail, relatively stable with growth in Residential Mortgage, Education and Unsecured more than offset by a planned reduction in Auto and lower Home Equity Core commercial loans up $1.9 billion, or 4%
Slide 10: Average funding and cost of funds
Average funding and cost of funds Highlights $s in billions Average interest-bearing liabilities and DDA Total long-term borrowings Fed funds, repo, ST borrowed funds Term deposits Checking with interest DDA Money market & savings Linked quarter: Total average deposits up $1.7 billion, or 2% Largely
Slide 11: Strong credit-quality trends continue
Strong credit-quality trends continue Allowance for loan and lease losses to nonperforming loans and leases. $s in millions (1) Nonperforming loans Allowance for loan and lease losses Highlights Provision for credit losses, net charge-offs Provision for credit losses Total net c/os Net c/o ratio Cor
Slide 12: Capital and liquidity remain strong
Capital and liquidity remain strong Highlights Capital levels remain at the higher end of the range for regional peers 2Q18 CET1 ratio of 11.2% is stable compared with 1Q18 Net income: 33 bp increase RWA growth: 14 bp decrease Common share repurchase: 12 bp decrease Dividends and other: 7 bp decreas
Slide 13: TOP V Program
TOP V Program Efficiency initiatives Target ~67% of total Branch transformation: Accelerate optimization of our branch footprint Mortgage simplification: Focus on organizational design and improving fulfillment efficiencies Process improvement: Next wave of opportunities to re-design end-to-end proc
Slide 14: Strategic initiatives update
Strategic initiatives update Balance Sheet Optimization Grow more attractive risk-adjusted return portfolios NIM up 21 bps YoY; ~7 bps of this is from our BSO efforts Core Education, personal unsecured and merchant financing up 21% YoY CRE originations up 85% and yield up 51 bps YoY; Industry Vertic
Slide 15: Making consistent progress against our financial goals
Making consistent progress against our financial goals Adjusted/ Underlying efficiency ratio(1) ~13 - 15% Key Indicators Adjusted/ Underlying ROTCE(1) EPS Adjusted/Underlying diluted EPS(1) Common equity tier 1 ratio(2) (3) Underlying results(1) Reported results(1) Adjusted results(1) Please see imp
Slide 16: 3Q18 CFG standalone outlook
3Q18 CFG standalone outlook Net interest income, net interest margin Noninterest expense Credit trends, tax rate Up modestly Positive operating leverage and efficiency ratio improvement Provision expense $85-$95 million Effective tax rate of ~23% CFG standalone(2) 3Q18 expectations vs. 2Q18 Capital,
Slide 17: FAMC standalone outlook
FAMC standalone outlook- expect early August close Net interest income, net interest margin Noninterest expense Capital, liquidity and funding Noninterest income ~$25-$30 million base noninterest expense before the impact of ~$10 million of integration costs(2) FAMC standalone 3Q18 expectations ~18
Slide 18: Key messages
Key messages 2Q18 results highlight disciplined execution and continued momentum Delivered EPS growth of 40% YoY, with Underlying revenue growth of 7%(1) 12.9% ROTCE and 58% efficiency ratio(1) Operating leverage of 7.0% YoY, 4.3% on an Underlying basis(1) Continue to execute well on TOP programs Ro
Slide 19: Appendix
Appendix 3% Citizens Fanci Grup re
Slide 20: Notable items: 2Q17 Impairments on aircraft lease assets
Notable items: 2Q17 Impairments on aircraft lease assets 2Q17 results reflect a $26 million pre-tax impact related to impairments on $152 million of corporate aircraft lease assets, predominately in the non-core portfolio, which relate to the period of The Royal Bank of Scotland (“RBS”) ownership an
Slide 21: Year-over-year results
Year-over-year results Includes loans held for sale. Please see important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their reco
Slide 22: Linked-quarter results
Linked-quarter results Net income available to common shareholders and EPS $s in millions, except per share data Return on average tangible common equity(2) á 122 bps NI á 12% EPS á 13% $0.88 $0.78 GAAP results Underlying results(2) Average loans(1) $s in billions á 2% Average deposits $s in billion
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
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
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
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
Slide 27: 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
Slide 28: 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
Slide 29: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Q2 2018 Earnings Presentation on 6ix