Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Debt Investor Presentation (June 2023)
32 slides from Citizens Financial's debt investor presentation, Jun 14, 2023
Slide 1: Fixed Income Presentation
Fixed Income Presentation June 14, 2023
Slide 2: Forward-looking statements and use of non-GAAP financial measures
Forward-looking statements and use of non-GAAP financial measures This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement. These state
Slide 3: Navigating well through a dynamic environment
Navigating well through a dynamic environment Disciplined offense to drive attractive performance over the medium term – Multi-year investments in fee-generation capabilities to deliver superior revenue growth in the medium term – New York Metro market entry progressing well; provides significant re
Slide 4: Strong franchise with leading positions in attractive markets
Strong franchise with leading positions in attractive markets Attractive footprint with large mass-affluent and affluent segments All-time high customer satisfaction in Consumer and Commercial Customer (1) Assets under growth management In millions growth $s in billions Strong league table results(2
Slide 5: Consumer strategic growth and profitability initiatives
Consumer strategic growth and profitability initiatives Focused on five key areas that will drive outsized revenue growth in the medium term Strategic priorities Progress made Current focus HSBC and ISBC platform conversions complete Focus on accelerating growth Building a leading Added 200+ b
Slide 6: Commercial Banking - broadening capabilities and strengthening execution
Commercial Banking - broadening capabilities and strengthening execution Strategic Priorities Transformed business since IPO Delivering results Significant talent, capabilities investments Strengthened corp finance, M&A advisory Capital and Global Markets fees up Deepening relationships with e
Slide 7: Entry into New York Metro progressing well
Entry into New York Metro progressing well Capitalizing on opportunities to capture market share in NYC/NJ Successfully executed Strong early Focus on accelerating conversions momentum growth Executing initiatives to build our brand, Top 10 market share(1) with ~200 Sales volumes beating expectation
Slide 8: Delivering a customer-focused, adaptable, resilient and secure technology environment
Delivering a customer-focused, adaptable, resilient and secure technology environment Enhanced engineering talent and tools • Since 2019, hired 550+ full stack engineers as Colleagues; reduced contractors 30% • Engineering Academies built to upskill 275+ Architects, Infrastructure Engineers, and Sof
Slide 9: Advancing ESG priorities
Advancing ESG priorities Leading with robust corporate Driving positive climate impact governance ■ Continued our shareholder engagement program, ■ Issued our first TCFD climate report detailing efforts meeting multiple shareholders representing underway to address climate-related risks and approxim
Slide 10: Strong capital position
Strong capital position CET1 Ratio as of March 31, 2023(1) TCE ratio as of March 31, 2023 Peer 1 10.2% Peer 1 7.6% Peer 2 10.1% CFG 6.6% CFG 10.0% Peer 2 6.3% Peer 3 9.9% Peer 3 5.8% Peer 4 9.6% Peer 4 5.6% Peer 5 9.3% Peer 5 5.5% Peer 6 9.2% Peer 6 5.5% Peer 7 9.1% Peer 7 4.8% Peer 8 9.1% Peer 8 4.
Slide 11: Strong capital position (continued)
Strong capital position (continued) $s in billions (period-end) 1Q22 2Q22 3Q22 4Q22 1Q23 Highlights Basel III basis ■ 1Q23 CET1 ratio of 10.0% compares with 10.0% in 4Q22 Common equity tier 1 capital $ 15.6 $ 17.9 $ 18.3 $ 18.6 $ 18.4 ■ TBV/share of $29.44, up 6% QoQ Risk-weighted assets $161.9 $187
Slide 12: Strong capital position (continued)
Strong capital position (continued) Capital stack comparison(1) Peer 1 10.2% 1.3% 1.8% 13.3% Peer 2 10.1% 0.5% 2.0% 12.5% CFG 10.0% 1.1% 1.8% 12.9% Peer 3 9.9% 1.3% 1.7% 12.9% Peer 4 9.6% 1.8% 2.2% 13.5% Peer 9.4% 1.4% 2.0% 12.8% Avg Peer 5 9.3% 1.2% 2.1% 12.6% Peer 6 9.2% 1.7% 1.9% 12.8% Peer 7 9.1
Slide 13: Highly diversified and retail-oriented deposit base
Highly diversified and retail-oriented deposit base Business Mix $172B Deposits Product Mix (As of 3/31/23) % Consumer Banking Total Deposits (2) DDA as % of Total Deposits insured/secured Deposits 13 See pages 28-29 for notes and important information on Non-GAAP Financial Measures, including “Unde
Slide 14: Deposit growth strategies
Deposit growth strategies Consumer Commercial ■ Continuing to accelerate efforts to drive strong relative ■ Attractive opportunities in the NY Metro market post- performance to peers in low-cost deposit categories conversion of Investors branches over the short and longer-term horizon ■ Relationship
Slide 15: Stable and resilient funding profile
Stable and resilient funding profile $s in billions Funding structure comparison(1,2) 22.3% 19.4% 18.8% 16.5% 13.9% 12.6% 12.4% 12.2% 11.0% 8.1% 3.2% Peer 1 Peer 2 Peer 3 Peer 4 Peer Avg Peer 5 Peer 6 Peer 7 CFG Peer 8 Peer 9 Senior debt/other Subordinated notes and debentures Trading liabilities Co
Slide 16: Citizens is a frequent issuer of senior debt, sub-debt, and preferred stock
Citizens is a frequent issuer of senior debt, sub-debt, and preferred stock $s in millions Diversified Funding Platforms and Balanced Maturity Profile Historical Citizens Fixed Income Issuance # of Issuances Per Year 4 3 3 3 4 4 2 3 1 Maturity Profile as of March 31, 2023 16
Slide 17: High-quality investment portfolio
High-quality investment portfolio $s in billions Investment portfolio(1) Highlights ▪ 94% U.S. Treasury and Government/Agency MBS ▪ 73% AFS securities, 27% HTM securities ▪ 6% private label (4% AAA-rated) ▪ 18% of total earning assets, below peer bank average of 24% ▪ Primary goal is to provide a so
Slide 18: Stabilizing and protecting NII and NIM
Stabilizing and protecting NII and NIM Cash flow hedges are the primary tool to manage interest rate exposure Receive fixed cash flow swaps - average notional balances $ billions at 3/31/23 Remaining 3 quarters W.A. receive fixed rate 4.3% 3.2% 3.1% 3.2% 3.2% 2.8% at 3/31/23(1) ALM hedging update ■
Slide 19: Rating agency credit ratings
Rating agency credit ratings March 31, 2023 Moody’s S&P Fitch Citizens Financial Group, Inc.: Long-term issuer Baa1 BBB+ BBB+ Short-term issuer NR A-2 F1 Subordinated debt Baa1 BBB BBB Preferred Stock Baa3 BB+ BB Citizens Bank, National Association: Long-term issuer Baa1 A- BBB+ Short-term issuer NR
Slide 20: Credit overview
Credit overview ■ Highly disciplined credit risk appetite ■ Retail portfolio super prime/prime-focused ■ Granular and diversified commercial portfolio in terms of geography, industry and asset class ■ Reserve levels strong – Allowance for credit losses coverage ratio of 1.47% up 4 bps QoQ; compares
Slide 21: Credit quality overview
Credit quality overview Credit provision expense (benefit); Highlights net charge-offs $s in millions ■ NCOs of $133 million, or 34 bps of average loans and leases, up 12 bps QoQ ■ Nonaccrual loans increased 4 bps QoQ to 64 bps of total loans driven by an increase in commercial, partly offset by a d
Slide 22: Proactive monitoring of the credit portfolio
Proactive monitoring of the credit portfolio Internal indicators External indicators Highlights Downgrade and watch list trends; • Disciplined approach to credit, Macro, regional, industry, sector focused on both risk and total credit reviews, cash flow analysis & Commercial trends relationship retu
Slide 23: $80.9B Commercial credit portfolio
$80.9B Commercial credit portfolio Diverse and granular portfolio Commercial portfolio risk ratings(2) $s in billions % of Balances total CFG ($ in billions) C&I $57.5 $82.2 $80.9 Finance and Insurance B- and lower Capital call facilities $ 6.5 4 % B+ to B Other Finance and Insurance 5.8 4 Other Man
Slide 24: Commercial Real Estate sector concerns
Commercial Real Estate sector concerns CRE by property type(1) (As of 3/31/2023) Balance % of total NPL ACL/NPL ACL Property Type NPL % ACL $ ($ in billions) CFG loans ($ in millions) Ratio Coverage Multifamily + Co-op $ 10.5 6.8 % $ 21 0.2 % $ 88 418 % 0.8 % Office - credit-tenant/life sciences 2.2
Slide 25: Commercial Real Estate - $6.3B Office Portfolio: well diversified
Commercial Real Estate - $6.3B Office Portfolio: well diversified Property type $4.1B General office breakdown Credit tenant $1.5B General office $4.1B Life sciences $0.7B Geography TX VA Mid-Atlantic CA Other NC 4 % WA 3 % GA 3 % Other New England DC 2 % Other 9 % Midwest 25
Slide 26: $73.8B Retail credit portfolio
$73.8B Retail credit portfolio Retail loans(1) High quality, diverse portfolio Other retail ■ Mortgage – FICO ~785 Education - Residential mortgages – Weighted-average LTV of ~55% refinance ■ Home equity – FICO ~765 Education - – ~42% secured by 1st lien in school – ~97% CLTV less than 80% – ~87% CL
Slide 27: Allocation of allowance for credit losses by product type
Allocation of allowance for credit losses by product type December 31, 2022 March 31, 2023 Loans and Allowance Coverage Loans and Allowance Coverage Leases Leases $s in millions Allowance for Loans and Lease Losses Commercial and industrial(1) $51,836 $581 1.12 % $50,450 $601 1.19 % Commercial real
Slide 28: Notes
Notes Notes on Non-GAAP Financial Measures See important information on our use of Non-GAAP Financial Measures at the beginning this presentation and reconciliations to GAAP financial measures at the end of this presentation. Non-GAAP measures are herein defined as Underlying results and including A
Slide 29: Notes
Notes Notes on Slide 21 - Credit quality overview 1) See note on non-GAAP financial measures. 2) Allowance for credit losses to nonperforming loans and leases. Notes on Slide 23 - Commercial credit portfolio 1) Includes deferred fees and costs. 2) Reflects period end balances. Notes on Slide 24 - Co
Slide 30: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS FULL YEAR 1Q23 Change 1Q23 4Q22 1Q22 4Q22 1Q22 2022 $ % $ % Noninterest income, Underlying: Noninterest income (GAAP) A $485 $505 $498 ($20) (4%) ($13) (3%) $2,009 Less: Notable it
Slide 31: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data QUARTERLY TRENDS 1Q23 Change 1Q23 4Q22 4Q22 $/bps % CET1 Ratio Adjusted for AFS & HTM unrealized losses CET1 capital $ 18,370 $ 18,574 $ (204) (1) % Less: AFS securities - AOCI 1,516 1,840 (324) (1
Slide 32: Citizens Financial Group, Inc.
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