Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2015
30 slides from Citizens Financial's conference presentation, Sep 16, 2015
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Bruce Van Saun Chief Executive Officer September p 16,, 2015
Slide 2: Important Information and GAAP/Non-GAAP Information
Important Information and GAAP/Non‐GAAP Information 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. These statements often include the words
Slide 3: Solid franchise with leading positions in attractive markets
Solid franchise with leading positions in attractive markets Retail p presence in 11 states Dimension(2) Rank(3) Top 5 deposit market share in 9 of 10 largest MSAs(1) Assets ‐ $137.3 billion #13 Loans ‐ $96.5 billion #12 Deposits ‐ $100.6 billion #13 National Branches ‐ ~1,200 #12 Rochester, NY: #4
Slide 4: Robust product offerings and balanced business mix
Robust product offerings and balanced business mix Consumer Commercial Retail Deposit Services Corporate Banking Mobile/Online Banking Commercial Real Estate Deep client Extensive Credit/Debit Card relationships p + product set p Franchise Finance Wealth W lth Management M t Asset Fi
Slide 5: Strong, clean balance sheet funded with low-cost deposits
Strong, clean balance sheet funded with low‐cost deposits Well capitalized with a Common equity tier 1 capital ratio of 11.8%(1) on a fully phased‐in Basel III basis Solid asset quality performance with core net charge‐offs of 29 bps in 2Q15 Strong deposit franchise with $81.4 billion of core
Slide 6: Aspire to be a top-performing regional bank
Aspire to be a top‐performing regional bank, delivering well for all stakeholders Colleagues Regulators Customers Investors Communities Co u es & Soc Society ey Customer‐centric culture 5
Slide 7: Building a top-performing regional bank
Building a top‐performing regional bank Where we’ve come from Where we are now Where we’re going Lagging revenue productivity Developed and implemented a Well‐balanced Commercial and ─ Under‐levered balance sheet plan to address underlying issues Consumer business mix ─ Lack of scale in key bu
Slide 8: Our vision and strategy
Our vision and strategy O objective Our bj i is i to b be a top‐performing f i regional i l bank b k that h delivers d li wellll for f our stakeholders k h ld Our vision is to deliver the best possible banking experience Our strategy to achieve this is to: Offer our customers a differentiated cust
Slide 9: These priorities have been mapped to specific initiatives
These priorities have been mapped to specific initiatives Improved Continued Commercial Balance Sheet Growth/ Consumer Momentum Capital Mix Normalization Bank Reenergize Household growth Build out Mid‐Corporate & Target 7 – 8% loan growth Grow Auto Specialty verticals Complete $250 million
Slide 10: Summary of progress on strategic initiatives
Summary of progress on strategic initiatives 2Q15 Initiative Commentary Status Reenergize household 2Q15 YoY checking household growth of 2%; new customer cross‐sell 1 growth rate improved to 3.28 vs. 2.98 in 2Q14 Expand Mortgage sales LOs up 86, or 23%, from 2Q14; Origination volume up 68% over 2Q1
Slide 11: Spotlight: Current focus areas for Consumer Banking
Spotlight: Current focus areas for Consumer Banking Customer segmentation strategies ─ Improve customer satisfaction ─ Drive loyalty and profitability Optimization of branch network and remote channels ─ Transform branches via multi‐year initiative ─ Enhance digital capabilities to accelerate ad
Slide 12: Spotlight: Current focus areas for Commercial Banking
Spotlight: Current focus areas for Commercial Banking Continue to smartly grow deposits to improve segment LDR ─ Involves choices on how and where we play ─ Requires improved planning and disciplines Tap full potential of Cash Management business ─ Continue technology investments to enhance capa
Slide 13: Incremental revenue and efficiency initiatives (Top 2)
Incremental revenue and efficiency initiatives (Top 2) 2016 Targeted Pre‐tax Benefit ($ iin millions) ($s illi ) Category Name Description Revenue Expense Operations Refine operating model to simplify $25‐$30 organization, reduce costs, improve service levels and enhance controls Efficiency Procurem
Slide 14: We remain positioned for rising rates
We remain positioned for rising rates… Interest‐rate sensitivity ranking (1,2) 13.0% (200 bps gradual increase) Net interest income poised to benefit from 10.4% rising rates 7.2% 6.8% ─ ~75% of asset sensitivity is centered around the short end of the yield curve 3 4% 2.8% 3.4% 2.4% 2.2% 2.2% 1.6%
Slide 15: CFG core revenue vs. peers
CFG core revenue vs. peers $s in millions CFG delivering solid core revenue growth as initiatives gain traction Growing revenues faster (Core revenue(1)) $1,191 $1,151 $1,159 $1,178 $1,165 $1 103 $ $1 090 $1,103 $1,090 $1,116 , CAGR 396 bps better than peers 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 C
Slide 16: CFG core net interest margin vs. peers
CFG core net interest margin vs. peers Lower core net interest margin Lower yield compression compression(1) (Earning asset yield) 3.31% 3.27% 3.69% 3.63% 3.22% 3.16% 3.58% 3.51% 3.08% 3.42% 3.34% 3.01% 2.98% 2.96% 3.32% 3.28% 21 bps 22 bps better than 3.27% better than 2.86% 2.81% 2.87% 2.85% 3.18%
Slide 17: CFG core noninterest income vs. peers
CFG core noninterest income vs. peers (1) $s in millions $640 CFG core noninterest $383 $379 $341 $339 $347 $360 income(1) $358 $351 $333 $337 $331 $339 $338 $329 $321 17% CAGR since 3Q13Q in capital markets, trust and investment, mortgage banking and / FX/trade finance fees 3Q13 4Q13 1Q14 2Q14 3Q14
Slide 18: CFG core efficiency improving vs. peers
CFG core efficiency improving vs. peers Expense/earning assets Operating expenses as a percent of earning assets (Core expense/core earning assets ratio(1)) have declined from 2.9% to 2.6%; #3 ranking among 3.5% 3.5% peers 3.3% 3.2% 3.2% 3.2% 3.1% 3.2% Core efficiency improvement reflects benefi
Slide 19: CFG asset quality performance vs. peers
CFG asset quality performance vs. peers Net charge‐offs/average loans and leases NPAs/Assets Favorable charge‐off trends Improving credit quality 1.45% 0 61% 0.61% 0.53% 0.51% 0.41% 0.38% 0.87% 0 35% 0.35% 0.33% 0 79% 0.79% 0.42% 0.31% 0.38% 0.27% 12 bps 0.32% 0.32% 0.34% improvement 0.54% vs. peers
Slide 20: Loan and deposit growth tracking well vs. peers
Loan and deposit growth tracking well vs. peers $s in billions Total average loans and leases Total average deposits(1) 112 bps 330 bps b better than h better than peers peers $98.5 $94.0 $95.6 $94.8 $95.6 $84.5 $85.8 $86.1 $88.0 $89.7 $92.0 $91.7 $87.9 $88.0 $86.4 $87.6 $39.7 $40.5 $41.2 $42.3 5 $
Slide 21: Capital and liquidity strong vs. peers
Capital and liquidity strong vs. peers Executed E ec ted $2 $2.2 2 billion in capital eexchange change Total capital ratio transactions since 6/30/2013, mix of capital now broadly aligned with peers 16.3% 16.1% 16.0% 16.2% 16.1% 15.8% 15.5% 15.3% 1.7% 1 7% points better than 14.2% 14.2% 14.2% 14.2
Slide 22: CFG core profitability vs. peers
CFG core profitability vs. peers $s in millions Accelerating profitability Improving return on equity (Core net income(1)) (Core return on average tangible common equity(1)) $523 $501 $500 $485 $516 $513 $478 $491 13 6% 13.6% 13.0% 12.5% 12.9% 12.6%12.6% Peers 2% 11.4% 11.5% Peers $216 $203 $209 203
Slide 23: Key messages
Key messages We are executing well against our agenda; delivering near‐term financial progress towards ambitious medium‐term goals We have the foundation for a great franchise, though much to do to tap full potential Our turnaround plan addresses gaps/weaknesses on both a tactical and strategi
Slide 24: Citizens Financial Group, Inc.
3« Citizens Financial Group, Inc.”
Slide 25: Appendix
Appendix %£ Citizens Financial Group, Inc.” 24
Slide 26: Summary GAAP Financial Information
Summary GAAP Financial Information 2Q15 change from $ iin millions $s illi 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q13 $ % Net interest income $ 770 $ 779 $ 808 $ 833 $ 820 $ 840 $ 836 $ 840 $ 70 9 % Noninterest income 383 379 358 640 341 339 347 360 (23) (6) Total revenue 1,153 1,158 1,166 1,473 1
Slide 27: Non-GAAP Reconciliation Table
Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 2015 Change 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 from 2013 Noninterest income, excluding special items: Noninterest income (GAAP) A $360 $347 $339 $341 $640 $35
Slide 28: Non-GAAP Reconciliation Table
Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 2015 Change 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 from 2013 Return on average tangible common equity and return on average tangible common equity, excluding rest
Slide 29: Non-GAAP Reconciliation Table
Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 2015 Change 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 from 2013 Total Average Deposits Total Average Depostis $98,533 $95,645 $94,798 $91,676 $92,166 $91,596 $93,184
Slide 30: Citizens Financial Group, Inc.
3« Citizens Financial Group, Inc.”
Citizens Financial Group — Barclays Global Financial Services Conference 2015 on 6ix