Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Barclays Global Financial Services Conference 2020
29 slides from Citizens Financial's conference presentation, Sep 15, 2020
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Bruce Van Saun Chief Executive Officer September 15, 2020
Slide 2: Forward-looking statements and use of non-GAAP financial measures
Forward-looking statements and use of non-GAAP financial measures Forward-Looking Statements. This document contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends, as wel
Slide 3: Executive Summary
Executive Summary 1H20 results demonstrate strength, diversity and resilience of franchise, along with continued Solid 1H20 strong execution performance in light of − Underlying PPNR up 10% in 1H20 vs. 1H19; Underlying positive operating leverage of 2.6%(1) COVID-19 − Record fee income driven by rec
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 Franchise highlights affluent segments Footprint GDP above national average − Personal consumption 43% higher than the national average − Higher percentage of households with income of $10
Slide 5: Seek to deliver attractive and sustainable long-term financial performance
Seek to deliver attractive and sustainable long-term financial performance Enterprise-wide initiatives Success will be driven by what Continued investments in our drive improvement in got us here today future performance Strong and experienced board Successful series of TOP Growth mindset: innovatin
Slide 6: Building a stronger and more diversified business model
Building a stronger and more diversified business model 1st regional bank Innovating for Created innovative merchant finance to market with attractive growth partnership platform with exceptional national digital Consumer Banking customer experience platform Have taken mortgage Top-15 bank-owned mor
Slide 7: Delivered solid 1H20 results in a difficult environment
Delivered solid 1H20 results in a difficult environment 1H20 vs. 1H19 A strong platform well-positioned to navigate challenges Strong revenue growth Broadly stable NII Robust fee income (Total revenue growth) (Net interest income growth) (Noninterest income growth) vs Peers vs Peers 22.1% vs Peers 1
Slide 8: Strong PPNR performance reflects benefit of investments, diversity of revenues
Strong PPNR performance reflects benefit of investments, diversity of revenues $s in billions Underlying PPNR(1,2) $2.7 $2.6 $2.3 $1.9 $1.6 $1.5 3.7% 3.8% 3.8% 3.4% 2.7% 2.9% 2015 2016 2017 2018 2019 1H20 Underlying PPNR % of average assets (9-qtr CCAR/DFAST basis) Post-IPO PPNR drivers Future PPNR
Slide 9: Multi-year investments have delivered greater fee diversification
Multi-year investments have delivered greater fee diversification $s in millions Underlying noninterest income(1) 15-'19 2015 2016 2017 2018 2019 CAGR 1H20 Service charges and fees $500 $522 $516 $513 $505 0% $202 Mortgage banking 101 112 108 156 302 31% 435 Card fees 232 203 233 244 254 2% 104 Capi
Slide 10: Diversification has resulted in reduced revenue volatility
Diversification has resulted in reduced revenue volatility Revenue volatility reduced ~20% through improved business mix, including recent strategic acquisitions Focused on growing higher-quality fee revenues to improve overall mix and improve stability Standard deviation of YoY quarterly revenue gr
Slide 11: Challenges over 2020-2022: Achieving growth in a ZIRP environment
Challenges over 2020-2022: Achieving growth in a ZIRP environment > Achieving EPS growth and ROTCE improvement in spite of pressure on NIM will require strong execution across all dimensions: Loan and deposit growth, BSO, NIM management Further fee income growth Expansion of TOP efficiency initiativ
Slide 12: Loan and deposit growth, BSO, NIM management
Loan and deposit growth, BSO, NIM management $s in billions Protecting NII through loan and deposit growth Total loans(1) Prudent loan growth $128.8 Growth focus on higher risk-adjusted return categories $117.9 $121.1 $109.3 $113.5 such as education refinance and innovative merchant $103.4 finance;
Slide 13: Loan and deposit growth, BSO, NIM management
Loan and deposit growth, BSO, NIM management $s in millions Protecting NII through BSO, NIM management Select examples of BSO actions since IPO Balance Sheet Optimization Assets: Enhancing asset and liability management to benefit NIM and improve risk-adjusted returns Growing attractive risk-adjuste
Slide 14: Further fee growth
Further fee growth Fee growth to be driven by ongoing investment in capabilities Fee area Current environment Expectations and opportunities Expect continued strength in refi volumes at today’s rates, despite market forecast for lower originations in 4Q and 2021 − Expect margins to remain elevated a
Slide 15: Expansion of TOP efficiency initiatives
Expansion of TOP efficiency initiatives TOP 6 Program progressing well; expected benefits of ~$300-$325 million in pre-tax run-rate impact by YE2021 Planning new transformation initiatives to upscale program Further enhance front-end digital capabilities to create frictionless customer experiences,
Slide 16: Digitization
Digitization Digital adoption rapidly increasing 1H20 YoY (1) Consumer deposit transaction mix %(3) YoY Digital App Branch Logins Downloads 43.1% -12.9pts 62.7% 55.1% 56.0% +19% +13% Mobile 30.3% +10.7pts 15.8% 19.6% Non-branch % Online banking 14.2% ATM of transactions(2) enrollments 23.1% 29.1% 24
Slide 17: Investing in strategic initiatives
Investing in strategic initiatives Investing in strategic priorities to generate top-line growth and efficiencies Consumer Commercial Integrating capabilities into a distinctive national value proposition Maturing corporate finance advisory model with deep expertise in multiple Focusing on new custo
Slide 18: Normalizing credit costs
Normalizing credit costs $s in millions Allowance for credit losses $2,527 $2,210 Observations 283% 255% Reserves strengthened in 1H20; allowance coverage of $1,320 $1,308 $1,296 2.09% ex-PPP(2) 182% 177% 184% 2.09% Economic outlook is stabilizing, reducing the need for 1.13% 1.11% 1.09% future rese
Slide 19: Normalizing credit costs – Forbearance update
Normalizing credit costs – Forbearance update $s in billions Forbearance summary Working proactively with Commercial Banking customers seeking flexibility on loan terms and conditions − Commercial deferrals trending down from ~3% in May to 1.8% at Commercial loan portfolio August 31, 2020 − Fewer C&
Slide 20: Astute and prudent capital management
Astute and prudent capital management Ample capital to support customers and maintain dividend 2Q20 CET1 ratio(1) Observations 11.3% CET1 ratio strong relative to required minimums 10.0% 9.8% 9.7% 9.7% and peers 9.6% 9.5% 9.1% 9.0% 8.9% Capital management priorities: ─ Protect the dividend ─ Prudent
Slide 21: Looking forward
Looking forward Positioned to leave crisis with positive momentum 1H20 results demonstrate strength, diversity and resiliency of franchise, along with Managing continued strong execution disruption from Underlying PPNR up 10% in 1H20 vs. prior year (1) a position of Strong capital and reserve positi
Slide 22: Appendix
Appendix 3* Citizens Financial Group, Inc.” 22
Slide 23: Notes
Notes Notes on Non-GAAP Financial Measures See important information on Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their reconciliations to GAAP financial measures. “Unde
Slide 24: Notes
Notes Notes on Non-GAAP Financial Measures See important information on Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their reconciliations to GAAP financial measures. “Unde
Slide 25: GAAP financial summary
GAAP financial summary FOR THE SIX MONTHS ENDED JUNE 30, Full Year 2020 Change 2020 2019 2019 2019 2018 2017 2016 2015 $/bps % Net interest income $ 2,320 $ 2,326 $ (6) -% $ 4,614 $ 4,532 $ 4,173 $ 3,758 $ 3,402 Noninterest income 1,087 890 197 22 1,877 1,596 1,534 1,497 1,422 Total revenue 3,407 3,
Slide 26: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 26
Slide 27: Non-GAAP financial measures and reconciliations
Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data 27
Slide 28: Non-GAAP financial measures and reconciliations – Underlying excluding the impact of PPP Loans
Non-GAAP financial measures and reconciliations – Underlying excluding the impact of PPP Loans $s in millions, except share, per share and ratio data 28
Slide 29: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Barclays Global Financial Services Conference 2020 on 6ix