Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2018
36 slides from Citizens Financial's conference presentation, Sep 12, 2018
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Bruce Van Saun Chief Executive Officer September 12, 2018 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. Statements regarding potential future share repurchases and future dividends are forward-lookin
Slide 3: Building a top-performing bank
Building a top-performing bank To help our customers, colleagues and communities reach their potential Continued progress in running the bank better and delivering for stakeholders Focused on continuous improvement and committed to excellence in our capabilities Well-positioned to maintain momentum
Slide 4: Attractive franchise with leading positions in top markets
Attractive franchise with leading positions in top markets $155.4 Rank #13 $113.4 Rank #11 $117.1 Rank #11 Top 5 deposit market share in 9 of our 10 largest MSAs(1) #2 deposit market share in New England(2) Top 5 rank HELOC in 9/9 markets(3) Top 4 rank in Education(4) Top 10 overall Middle Market le
Slide 5: Diversified and balanced business model
Diversified and balanced business model Deposits $117.1 billion(2) Loans and leases $113.4 billion(2) Consumer Commercial Note: Period-end balances as of June 30, 2018 excludes held for sale. Includes select originations outside the traditional branch banking footprint. Consumer/Commercial deposit a
Slide 6: Strong, clean balance sheet funded largely by robust deposit franchise
Well capitalized with a common equity tier 1 capital ratio of 11.2% Strong asset-quality performance with net charge-offs of 27 bps(1) in 2Q18 Robust deposit franchise with $93.3 billion of average core deposits(2), with ~54% retail Strong liquidity and fully compliant liquidity coverage ratio Stron
Slide 7: Driving continued progress toward our financial targets
Driving continued progress toward our financial targets 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 im
Slide 8: A strong platform well-positioned to drive value
Strong operating leverage (YoY Positive operating leverage(1)) Executive Summary---Positioning Citizens to Investors Strong loan growth (Average total loan growth) A strong platform well-positioned to drive value Growing revenues (Total revenue growth) NIM expansion (Net interest margin change) ` Ro
Slide 9: How we will stand out from the competition
How we will stand out from the competition Building an innovative, customer-centric organization that delivers for our customers, colleagues and communities Deliver the best possible banking experience through our customer-first culture Become the trusted financial advisor to our customers Engage, i
Slide 10: Keys to delivering higher medium-term returns
Keys to delivering higher medium-term returns Tapping Our Potential (“TOP”) and Balance Sheet Optimization (“BSO”) Drive growth in fee businesses Active capital management Enterprise-wide initiatives to drive improvement in performance TOP - Rigorous efficiency and revenue growth program to drive pe
Slide 11: 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 12: BSO: Rigorous program to improve returns while driving growth
BSO: Rigorous program to improve returns while driving growth 2Q18 YoY NIM expansion of 21 bps reflects 7 bps contribution from BSO efforts Assets Liabilities Loan portfolio Reposition/optimize loan mix; improve returns while maintaining relatively stable stress losses Reallocate capital within loan
Slide 13: Strong deposit base, with opportunities to grow stable deposits cost-effectively
Core excludes term and wholesale deposits. Annualized costs of deposits for the three months ended June 30, 2018. Term Savings & Money Market Checking with Interest Demand Cost of deposits: 0.63%(2) $115.1 billion 2Q18 average deposits Strong deposit base, with opportunities to grow stable deposits
Slide 14: Driving fee growth across Commercial and Consumer
Commercial Capital & Global Markets Broaden capabilities in DCM, M&A, CRE New FX options/currency swaps platform and capabilities 2Q17 Western Reserve Partners acquisition added 30+ M&A professionals(2) Treasury Solutions Implementing best-in-class cash management system Investments in trade finance
Slide 15: Plans to adjust capital structure but remain above peers
Plans to adjust capital structure but remain above peers Highlights Common equity tier 1 comparison(1) Source: Data as of 2Q18. Peer data from company disclosures. Capital targets from company earnings calls, company disclosures and CFG estimates. As of 8/15/18. Source: Bloomberg Strong CET1 capital
Slide 16: Investing in future-oriented digital services and technology platforms
Investing in future-oriented digital services and technology platforms Adaptive security Open architecture Cloud Agile Modernize strategic platforms Data analytics Convert data into intelligence Deliver access to high quality data for decision-making Enhance customer acquisition Deliver personalized
Slide 17: Data & analytics capabilities are key to our success
Data & analytics capabilities are key to our success 16 Improve customer experience Future of fulfillment – expedited offers and closings Personalize customer interactions across all channels Using data & analytics strategically across the company Consumer Shift to targeted promotional deposit and l
Slide 18: Enhancing customer experience to drive growth and efficiency
Enhancing customer experience to drive growth and efficiency Create valuable customer experiences throughout all interactions Consumer Customer Journeys Embrace digital and data to improve experience Welcome to the bank Simplified account opening experience; expanding to all product channels Help me
Slide 19: Building an ecosystem of FinTech partnerships
Building an ecosystem of FinTech partnerships to accelerate our path to market 18 New digital (mobile-first) platform Simple and fast account opening experience Digitized home buying process Digitized HELOC application process Digital invoice and payment collection solution for Commercial customers
Slide 20: Delivering for our customers and stakeholders
Delivering for our customers and stakeholders 19 Citizens Bank SpeciFiSM 2018 Temkin Experience Rating, U.S. March 2018. J.D. Power 2017 U.S. Retail Rankings Satisfaction Study, April 2017. Top 5 reflects wait times and in-person best practices for J.D. Power-surveyed footprint. Barlow Research 2017
Slide 21: Key Messages
Key Messages 20 We continue to make good progress, delivering enhanced results for our stakeholders We are focused on growth, building a great bank and are confident in our outlook Strong Board, and talented and seasoned management team Focus on continuous improvement will drive continued EPS growth
Slide 22: Appendix
Appendix 3% Citizens Fanci Grup re
Slide 23: Leadership Team and Board
Average industry experience of 30 years Leadership Team Member Title Bruce Van Saun Chairman and Chief Executive Officer John F. Woods Chief Financial Officer Mary Ellen Baker EVP and Head of Business Services Brad Conner Vice Chairman and Head of Consumer Banking Brendan Coughlin EVP, President of
Slide 24: 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 Verti
Slide 25: Smartly growing our balance sheet
At Citizens, we continue to smartly grow our balance sheet á 17% Good loan growth with rising yields Return on loan book regulatory capital improving(2) Stress losses as a % of loans(3) Total loans $ billions Average loan balances. Reflects after-tax return calculated as loan interest income/regulat
Slide 26: Retail loan performance
1.03% 0.70% 0.58% 0.53% 0.47% Retail loan performance Total retail loss rate Consistent loan growth over 2013 to 2017 of 5.1% CAGR Paced by growth in high-quality mortgage, student, auto Yields up, return on capital up, charge-off trend favorable, stress losses down Expect average retail loss rates
Slide 27: Retail and commercial portfolio composition
$58.5 billion 2Q18 retail portfolio Source: Company data. Portfolio balances loan category, NCO and NPL data, FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of June 30, 2018, as applicable. Footprint defined as 11-state
Slide 28: Auto portfolio credit metrics
Auto portfolio credit metrics 27 Highlights by Refreshed FICO score ≤ 48 49-60 76-84 61-66 67-72 73-75 by Origination LTV 80-89% 90-99% 100-109% 110-119% ≥ 120% ≤ 80% Assumes that for loans where refreshed FICO score information not available, the balance stratification is consistent with the remain
Slide 29: Core education finance portfolio overview
Core education finance portfolio overview Highlights by Refreshed FICO Note: YoY delinquency and NPL improvement driven by sale of FFELP loans in 3Q 2014. Previous origination data was based on amounts disbursed to students per quarter and represented balance sheet loan growth. Current data represen
Slide 30: Education refinance portfolio overview
$s in millions 2014 2015 2016 2017 2Q18 Period-end loans $231 $1,946 $4,054 $5,354 $5,629 Average loans $49 $993 $3,076 $4,892 $5,522 Average FICO 778 776 777 780 781 30-day past due % 0.02% 0.09% 0.17% 0.20% 0.21% 60-day past-due % 0.00% 0.05% 0.08% 0.09% 0.10% NPL % 0.00% 0.02% 0.04% 0.09% 0.12% N
Slide 31: Consumer unsecured
Consumer unsecured* Highlights Launched merchant partnership financing in 3Q15 Developing strategic partnerships designed around high-quality merchant partnership offerings Partnerships utilize loss-sharing arrangements Apple partnership launched mid-2015 Vivint Smart Home and HP partnerships launch
Slide 32: Core commercial portfolio overview
Core commercial portfolio overview Asset quality relatively stable and has reached pre-crisis levels Overall credit risk is moderate and compares well with peers Quality of new originations compares favorably to overall portfolio 1Q16 regulatory guidance drove an increase in non-accruals; 30% of non
Slide 33: Commercial real estate line of business – project-secured lending
Commercial real estate line of business – project-secured lending 32 2Q18 $9.1 Billion Project-secured Lending Highlights by Geography (1) Portfolio well diversified by property type and geography 95% of the portfolio has an LTV of 75% or lower Strategic emphasis on major MSAs, especially growth in
Slide 34: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations 33 $s in millions, except share, per share and ratio data
Slide 35: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations 34 $s in millions, except share, per share and ratio data
Slide 36: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations 35 $s in millions, except share, per share and ratio data
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