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
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 CFG corporate headquarters Providence, RI CFG branch location Serve
Slide 4: Substantial progress in prudently growing the balance sheet
Substantial progress in prudently growing the balance sheet Top 5 deposit market share in 9 of 10 largest MSAs(4) Dimension(1) Rank(2) $90.9 billion $106.1 billion Assets: $151.4 billion #12 2012(11) 3Q17(11) Loans: $110.2 billion(3) #11 #12 nationally; Deposits: $113.2 billion Top 5 rank in 9/10 ma
Slide 5: Making consistent progress against our financial goals
Making consistent progress against our financial goals Strong execution against all strategic initiatives and continued momentum ROTCE(1) IPO-based Efficiency ratio(1) IPO-based (Return on average tangible common equity) medium-term medium-term target target 10.1% 10%+ 68.5% 69.8% 8.6% 66.0% ~60% 68
Slide 6: Turning the corner — elevated our mission & sharpened how we will differentiate
Turning the corner — elevated our mission & sharpened how we will differentiate We have executed well on our turnaround plan We have built a solid foundation with multiple levers to continue to improve our performance to peer median and beyond Turning Entering a new phase focused on becoming a top-p
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 Since 3Q13, delivered 5.8% improvement in ROTCE to 10.1%(1) 1) Please see important information on Key Performance M
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 Continuous effort to improve risk-adjusted returns and NIM while driving growth Strong growth - Leveraging capital Continue growth, optimization and capital return IPO Today Target Loan growth well above nominal Loan growth modestly ahead of Continue
Slide 11: Targeting higher return and deeper relationship lending
Targeting higher return and deeper relationship lending Consumer Grow Education and Unsecured Evaluation of loan portfolio lending; reduce Auto Utilize FinTech relationship and High Credit Card SBA to enhance Business Banking Personal Unsecured Further expand in-footprint Home Unsecured Salable Mort
Slide 12: Targeting lower cost relationship-oriented deposit base
Targeting lower cost relationship-oriented deposit base Consumer Data & analytics drive Evaluation of deposits personalized targeting across Consumer and products Low Commercial DDA Targeted mobile and digital Consumer acquisition CWI Opportunity to acquire lower-cost deposits by Personal Savings Co
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 $112.9 billion 3Q17 average deposits targeting models across all programs and products 82% Core(1) Executing targeted mobile and online digital customer
Slide 14: Remain rate sensitive
Remain rate sensitive Interest rate sensitivity ranking (200 bps gradual increase) 10.0% Net interest income positioned 6.2% 5.8% to continue to benefit from 5.4% 3.9% rising rates 3.5% 2.0% 1.6% ─ Our asset sensitivity has 1.5% 1.1% remained relatively stable at 5.4% CMA RF PNC CFG BBT MTB USB STI
Slide 15: Further opportunities to improve returns: Growth in fee income businesses
Further opportunities to improve returns: Growth in fee income businesses Fee income Consumer Commercial Wealth Capital & Global Markets Investments in FCs and sales, technology Broaden capabilities in DCM, M&A, CRE platforms and products with shift toward managed money New FX options/currency swaps
Slide 16: Focus on growing fee income delivering steady progress
Focus on growing fee income delivering steady progress ↓ 12% Y/Y $ millions YoY fee income growth GAAP Consumer 4% Y/Y $435 (1) Adjusted(1) $381 Wealth fees: Fee-based sales 41% for 3Q17. $377 $379 $370 $381 $368 (1) Enhanced client targeting should drive additional growth Mortgage fees: Seeing succ
Slide 17: Further opportunities to improve returns: Capital management
Further opportunities to improve returns: Capital management Capital management CET1 capital comparison(1) Highlights Continue to maintain strong CET1 capital position relative CMA 11.5% to our peers ─ Expect annual normalization of ~40 bps given both RF 11.3% capital return and strong loan growth C
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 EP
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
Slide 20: Appendix
Appendix 3* Citizens Financial Group, Inc.”
Slide 21: TOP IV initiatives ramping up and making good progress
TOP IV initiatives ramping up and making good progress New Channels Direct-to-Consumer Mortgage: direct marketing lead program launched; pull through rates ahead of expectations; delivering ancillary benefits to Home Equity Digital as a Sales Engine: technical build underway to drive more relevant a
Slide 22: At Citizens, we continue to smartly grow our balance sheet
At Citizens, we continue to smartly grow our balance sheet Total loans(1) $ billions $103 $109 $89 $96 22% Good loan growth with rising yields 3.96% 3.37% 3.32% 3.51% 2014 2015 2016 3Q17 Loan yields Loan portfolio returns 25% 14% 22% 21% 22% (2) Return on loan book regulatory capital improving 2014
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 QUARTERLY TRENDS FOR THE NINE MONTHS ENDED SEPT 30, 3Q17 Change 2017 Change 3Q17 2Q17 1Q17 4Q16 3Q16 2Q17 3Q16 2017 2016 2016 $ % $ % $ % Noninterest inc ome, Adjusted: Non
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 QUA RTERLY TRENDS FOR THE NINE MONTHS ENDED SEPT 30, 3Q17 Change 2017 Change 3Q17 2Q17 1Q17 4Q16 3Q16 2Q17 3Q16 2017 2016 2016 $/bps % $/bps % $/bps % Operating leverage: T
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 QUARTERLY TRENDS FOR THE NINE MONTHS ENDED SEPT 30, 3Q17 Change 2017 Change 3Q17 2Q17 1Q17 4Q16 3Q16 2Q17 3Q16 2017 2016 2016 $/bps % $/bps % $/bps % Tangible book value pe
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 QUA RTERLY TRENDS FOR THE NINE MONTHS ENDED SEPT 30, 3Q17 Change 2017 Change 3Q17 2Q17 1Q17 4Q16 3Q16 2Q17 3Q16 2017 2016 2016 $ % $ % $ % Other inc ome, Adjusted Other inc
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 QUARTERLY TRENDS 3Q17 Change 3Q17 2Q17 1Q17 3Q16 2Q17 3Q16 $/bps % $/bps % Noninterest inc ome, Underly ing: Noninterest income (GAAP) $381 $370 $379 $
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 QUARTERLY TRENDS 3Q17 Change 3Q17 2Q17 1Q17 3Q16 2Q17 3Q16 $/bps % $/bps % Operating leverage: Total revenue (GAAP) A $1,443 $1,396 $1,384 $1,380 $47 3
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 QUARTERLY TRENDS 3Q17 Change 3Q17 2Q17 1Q17 3Q16 2Q17 3Q16 $/bps % $/bps % Return on average total tangible assets and return on average total tangible
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 FOR THE THREE MONTHS ENDED SEP. 30 JUN. 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SE
Slide 31: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
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