Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q1 2019 Earnings Presentation
30 slides from Citizens Financial's earnings presentation, Apr 18, 2019
Slide 1: 1Q19 Financial Results
1Q19 Financial Results April 18, 2019
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 meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are
Slide 3: 1Q19 GAAP financial summary
1Q19 GAAP financial summary Reported 1Q19 change from $s in millions 1Q19 4Q18 1Q18 4Q18 1Q18 $/bps % $/bps % Net interest income $1,160 $1,172 $1,091 $ (12) (1)% $ 69 6% Noninterest income 428 421 371 7 2 57 15 Total revenue 1,588 1,593 1,462 (5) — 126 9 Noninterest expense 937 951 883 (14) (1) 54
Slide 4: 1Q19 highlights
1Q19 highlights Underlying net income available to common(1) of $428 million with EPS of $0.93 up 19% YoY − Underlying ROTCE(1) of 13.1% compares with 11.7% in 1Q18 and 14.1% in 4Q18 Revenue of $1.6 billion up 9% YoY and relatively stable QoQ given day count and seasonal impacts Improving ─ NII broa
Slide 5: 1Q19 Underlying financial summary
1Q19 Underlying financial summary(1) 1Q19 change from Highlights 1Q19 4Q18 1Q18 4Q18 1Q18 YoY Linked quarter: (1) (1) (1) Underlying $s in millions Underlying Underlying Reported Underlying Reported before Underlying net income available to common stockholders %/bps %/bps Acquisitions(1) down 7%, an
Slide 6: Net interest income
Net interest income $s in millions, except earning assets Net interest income Highlights Linked quarter: NII down modestly, reflecting 1.5% average loan growth and $145.5B stable NIM, partially offset by a $20 million decrease tied to $138.7B $140.5B $142.2B $143.8B day count FTE basis NIM of 3.25%
Slide 7: Underlying noninterest income
Underlying noninterest income(1) $s in millions 1Q19 change from Highlights Underlying, as applicable 1Q19 4Q18 1Q18 4Q18 1Q18 Linked quarter: $ % $ % Underlying noninterest income was up $2 million. Excluding Service charges and fees $ 123 $ 131 $ 124 $ (8) (6) % $ (1) (1) % Acquisitions, nonintere
Slide 8: Underlying noninterest expense
Underlying noninterest expense(1) $s in millions Highlights 1Q19 change from Underlying, as applicable 1Q19 4Q18 1Q18 4Q18 1Q18 Linked quarter: % % Underlying noninterest expense was up $26 million, or 3% $ $ Salaries & employee benefits $ 508 $ 477 $ 470 $ 31 6% $ 38 8% Underlying salaries and empl
Slide 9: Average loans and leases
Average loans and leases Average core loans and leases YoY Loan Growth Highlights $114.2B $116.1B Total core $111.0B $112.2B Linked quarter: $109.2B 6% Average core loans and leases up $1.8 billion, or 1.6% ─ Core commercial loans up $1.4 billion, or 3%, with growth in C&I and commercial real estate
Slide 10: Average funding and cost of funds
Average funding and cost of funds $s in billions Average interest-bearing liabilities and DDA Highlights $134.5B $135.8B Linked quarter: $130.7B $132.7B $129.1B Total average deposits up $2.6 billion, or 2% $15.6 $14.7 Total long-term borrowings $14.9 $14.3 ─ Largely reflects growth in term, savings
Slide 11: Strong credit-quality trends continue
Strong credit-quality trends continue $s in millions Highlights Overall credit quality remains strong, reflecting growth in lower-risk retail portfolios and a Nonperforming loans relatively stable risk profile in commercial NPLs to total loans and leases ratio of 0.66% improved from 0.68% in 4Q18 an
Slide 12: Capital and liquidity remain strong
Capital and liquidity remain strong as of Highlights $s in billions (period-end) 1Q18 2Q18 3Q18 4Q18 1Q19 Capital levels remain at the higher end of the range for (1) Basel III basis regional peers Common equity tier 1 capital $ 14.4 $ 14.6 $ 14.4 $ 14.5 $ 14.4 Risk-weighted assets $ 129.1 $ 130.6 $
Slide 13: 1Q19 Strategic initiatives update
1Q19 Strategic initiatives update NIM up 4 bps YoY with benefit driven by BSO efforts, largely offset by impact of DDA migration and other Strategic & business highlights Balance Sheet Optimization deposit mix items Grow more attractive Core education, personal unsecured and merchant risk-adjusted f
Slide 14: 2Q19 outlook
2Q19 outlook 2Q19 Underlying outlook 1Q19 Underlying results(1) (includes the impact of acquisitions and excludes expected notable items) Net interest $117.6 billion average loans Average loans up ~0.5% income, net 3.25% NIM NIM stable to down slightly in 2Q19; gradual rise interest margin in 2H19 N
Slide 15: Key messages
Key messages Citizens 1Q19 results highlight disciplined execution and continued momentum ─ Delivered EPS growth of 18% YoY, 19% on Underlying basis(1) ─ 13.0% ROTCE, 13.1% on Underlying basis(1) ─ 59.0% efficiency ratio, 58.7% on Underlying basis(1) ─ Operating leverage of 2.6% YoY, 5.0% on Underly
Slide 16: Appendix
Appendix 3* Citizens Financial Group, Inc.”
Slide 17: Making consistent progress against our financial targets
Making consistent progress against our financial targets Jan 2019 Key Indicators Medium-term targets Adjusted/ 12.9%13.5%14.1%13.1% Underlying 9.0% 9.6% 10.1%10.4%11.7% 4.3% 5.2% 5.2% 6.3% 6.2% 6.8% 6.7% 6.7% 6.6% 6.8% 6.6% 7.3% 8.0% 8.4% ~14 – 16% ROTCE(1) 13.3% 13.8% 13.0% 68% 68% 69% 70% 68% 67%
Slide 18: Year-over-Year results
Year-over-Year results Pre-provision profit Period-end loans Return on average total $s in millions $s in billions tangible assets $117.6 6% $656 $111.4 $579 13% 9 bps 1.08% 1.17% 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 Net income available to Period-end deposits Return on average tangible common shareholders
Slide 19: Notable Items
Notable Items(1) Several items have been excluded from reported results to better reflect Underlying operating results.(1) First quarter 2019 and third and fourth quarter 2018 results reflect notable items related to integration costs primarily tied to the August 1, 2018 Franklin American Mortgage C
Slide 20: Reported noninterest income and noninterest expense summary
Reported noninterest income and noninterest expense summary $s in millions Reported 1Q19 change from Noninterest income 1Q19 4Q18 1Q18 4Q18 1Q18 $ % $ % Service charges and fees $ 123 $ 131 $ 124 $ (8) (6) % $ (1) (1) % Card fees 59 62 61 (3) (5) (2) (3) Capital markets fees 54 45 39 9 20 15 38 Trus
Slide 21: 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 21
Slide 22: 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 22
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 23
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 24
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 25
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 26
Slide 27: Non-GAAP reconciliations – Underlying excluding Acquisitions
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying excluding Acquisitions $s in millions, except share, per share and ratio data 27
Slide 28: Non-GAAP reconciliations – Underlying excluding Acquisitions
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying excluding Acquisitions $s in millions, except share, per share and ratio data 28
Slide 29: Notes
Notes Notes on Key Performance Metrics and Non-GAAP Financial Measures See important information on Key Performance Metrics and 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
Slide 30: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Q1 2019 Earnings Presentation on 6ix