Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2018
37 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
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 Continued progress in running the bank better and delivering for stakeholders Delivering Focused on continuous improvement and committed to excellence in our capabilities results Well-positioned to maintain momentum with multiple additional levers to improve performanc
Slide 4: Attractive franchise with leading positions in top markets
Attractive franchise with leading positions in top markets Franchise highlights 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) CFG corporate headquarters Providence, RI Top 4 rank in Education(4) CFG branch locat
Slide 5: Diversified and balanced business model
Diversified and balanced business model Consumer Loans and leases Commercial In footprint $113.4 billion(2) National Retail Deposit Services Coverage Mobile/Online Banking Commercial & Industrial Banking 54% Mortgage(1) 46% Commercial Real Estate Home Equity Loans/Lines Corporate Verticals Wealth Ma
Slide 6: Strong, clean balance sheet funded largely by robust deposit franchise
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% ret
Slide 7: Driving continued progress toward our financial targets
Driving continued progress toward our financial targets Medium-term Key indicators targets 11.7% 12.9% ~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%
Slide 8: Delivered attractive balance sheet and financial performance in 1H18
Delivered attractive balance sheet and financial performance in 1H18 1H18 vs. 1H17 A strong platform well-positioned to drive value Strong loan growth Growing revenues NIM expansion (Average total loan growth) (Total revenue growth) (Net interest margin change) ` vs Peers 6.9% vs Peers 21 bps vs Pee
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 Strong — Deliver the best possible banking experience through our customer-first culture customer- focused — Become the trusted financial advis
Slide 10: Keys to delivering higher medium-term returns
Keys to delivering higher medium-term returns Tapping Our Enterprise-wide initiatives to drive improvement in performance Potential — TOP - Rigorous efficiency and revenue growth program to drive performance (“TOP”) and and allow self-funding of investments Balance Sheet Optimization — BSO - Recycle
Slide 11: TOP programs demonstrate our continuous improvement mindset
TOP programs demonstrate our continuous improvement mindset TOP IV actions largely complete; expected 2018 pre-tax benefit of ~$100-$110 million TOP V Program Targeting pre-tax benefit of ~$90-$100 million by end of 2019 Selected examples Efficiency initiatives Target ~67% of total Branch transforma
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 Deposits Reposition/optimize loan mix; improve returns while Optimize deposit mix – focus on lower-cost categories, maintainin
Slide 13: Strong deposit base, with opportunities to grow stable deposits cost-effectively
Strong deposit base, with opportunities to grow stable deposits cost-effectively Consumer Data & analytics drive holistic and personalized customer $115.1 billion 2Q18 average deposits targeting models across all programs and products 81% Core(1) — In-branch offers, mobile and online digital custome
Slide 14: Continued focus on closing fee income gap to peers
Continued focus on closing fee income gap to peers Significant opportunity to improve fee income, which is underweight relative to peers(1) Driving growth in fee income by enhancing products, capabilities and expertise Consumer Commercial Investments in personnel plus sales, Capital & Global Broaden
Slide 15: Plans to adjust capital structure but remain above peers
Plans to adjust capital structure but remain above peers Common equity tier 1 comparison(1) Highlights Strong CET1 capital position relative to peers CMA 11.9% ─ Expect annual normalization of ~40 bps given both CFG 11.2% capital return and strong loan growth ─ Expect peers to move towards 9%–10% ov
Slide 16: Investing in future-oriented digital services and technology platforms
Investing in future-oriented digital services and technology platforms Delivering a customer-focused, adaptable, secure & resilient technology environment Modernize strategic Data analytics Adaptive security platforms Minimize manual processes; Convert data into intelligence Prepare for emerging thr
Slide 17: Data & analytics capabilities are key to our success
Data & analytics capabilities are key to our success Using data & analytics strategically across the company Deliver operational Enhance sales productivity & Improve customer experience efficiency and reduced costs accelerate growth Future of Personalize Streamline Streamline Improve Personalized fu
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 Commercial Origination Launched customer account Customer Journeys Trusted advisor plans, dashboard & Embrace digital and data to improve experience Create client va
Slide 19: Building an ecosystem of FinTech partnerships to accelerate our path to market
Building an ecosystem of FinTech partnerships to accelerate our path to market Launched innovative solutions and new Investing in additional capabilities that leverage capabilities that offer flexibility and speed for FinTech relationships our customers Selected examples Selected examples New digita
Slide 20: Delivering for our customers and stakeholders
Delivering for our customers and stakeholders National Recognition for Board of Directors and Board Member Citizens ranked 1st among U.S. financial services companies and Ranked #1 in Temkin 18th overall for the strength of Citizens Bank awarded Best Customer Experience for corporate governance Trea
Slide 21: Key Messages
Key Messages 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 growt
Slide 22: Appendix
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Slide 23: We are led by a strong and experienced board & leadership team
We are led by a strong and experienced board & leadership team Since January 2015, have attracted or promoted from within ~32% of our Executive Leadership Group (top 137) Leadership Team Member Title Board Member Committees Bruce Van Saun Chairman and Chief Executive Officer Bruce Van Saun Chairman
Slide 24: Strategic initiatives update
Strategic initiatives update* NIM up 21 bps YoY; ~7 bps of this is from our BSO efforts Strategic & business highlights Balance Sheet Optimization Grow more attractive Core Education, personal unsecured and merchant risk-adjusted financing up 21% YoY Consumer return portfolios CRE originations up 85
Slide 25: At Citizens, we continue to smartly grow our balance sheet
At Citizens, we continue to smartly grow our balance sheet $ billions Total loans(1) 17% $113 Good loan growth with rising yields $109 $103 4.34% $96 3.87% 3.51% 3.32% 2015 2016 2017 2Q18 Loan yield 28% 27% (2) 25% Return on loan book regulatory capital improving 21% 22% 2015 2016 2017 2Q18 5.8% 5.1
Slide 26: Re-balancing retail loan mix to drive improved risk-adjusted returns
Re-balancing retail loan mix to drive improved risk-adjusted returns Retail loan performance 2013 2017 Average balances; $ in billions Loan Loss Loan Loss (1) (1) Mix rate Mix rate $57.0 $54.2 Core resi mortgage 18% 0.38% 28% 0.04% $51.3 $46.7 $48.1 98% Core home equity 44 0.66 27 0.13 97% Auto 19 0
Slide 27: Diversified and granular loan mix
Diversified and granular loan mix $58.5 billion $54.9 billion 2Q18 retail portfolio 2Q18 commercial portfolio Business Non-Core Other Banking Non-Core Residential Out of 5% 2% Leases Out of Education Finance Mortgage 25% footprint(1,2) 36% footprint(1,2) 14% 30% Midwest (2) 12% (2) Credit Cards 3% 1
Slide 28: Auto portfolio credit metrics
Auto portfolio credit metrics Highlights(1) 2Q18 $12.5 billion Auto portfolio Auto Finance portfolio – purchase only, no (2) by Refreshed FICO score (1,2) by Origination LTV leasing, weighted-average FICO score of ~730 % new car < 620 ~60% ≥ 120% ≤ 80% − 2Q18 originations of $1.2 billion with > 800
Slide 29: Core education finance portfolio overview
Core education finance portfolio overview Highlights 2Q18 $8.2 billion core education finance portfolio Core education finance portfolio weighted-average FICO (1) by Refreshed FICO by Segment (1) score of ~780 and co-sign rate of ~50% ~95% of InSchool loans co-signed with weighted-average > 800 < 62
Slide 30: Education refinance portfolio overview
Education refinance portfolio overview Highlights 2Q18 $5.6 billion education refinance portfolio Education refinance product largely mitigates two greatest student by Portfolio lending risks: Citizens − Did the borrower graduate? ERL − Did the borrower gain employment? 68% Education refinance portf
Slide 31: Consumer unsecured
Consumer unsecured* Highlights 2Q18 $2.6 billion consumer unsecured portfolio Launched merchant partnership financing in 3Q15 $s in millions $2,565 $2,373 Developing strategic partnerships designed around $2,241 high-quality merchant partnership offerings $1,691 52% − Partnerships utilize loss-shari
Slide 32: Core commercial portfolio overview
Core commercial portfolio overview Highlights 2Q18 $54.1 billion core commercial portfolio Asset quality relatively stable and has reached by Industry Sector (1) pre-crisis levels Arts, Entertainment, and Recreation All Others (3) Automotive Real Estate and Rental Overall credit risk is moderate and
Slide 33: Commercial real estate line of business – project-secured lending
Commercial real estate line of business – project-secured lending Highlights 2Q18 $9.1 Billion Project-secured Lending Portfolio well diversified by property type by Property Type $9.1B and geography $8.2B 3%3% 1% 95% of the portfolio has an LTV of 75% or lower 1% 3% 1% 6% 3% 3% Strategic emphasis o
Slide 34: 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 33
Slide 35: 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 34
Slide 36: 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 35
Slide 37: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
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