Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q2 2019 Earnings Presentation
32 slides from Citizens Financial's earnings presentation, Jul 19, 2019
Slide 1: 2Q19 Financial Results
2Q19 Financial Results July 19, 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 Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are for
Slide 3: 2Q19 GAAP financial summary
2Q19 GAAP financial summary For The Six Months Ending June 30, Reported 2Q19 change from 2019 Change $s in millions 2Q19 1Q19 2Q18 1Q19 2Q18 2019 2018 2018 $/bps % $/bps % $/bps % Net interest income $ 1,166 $1,160 $1,121 $ 6 1% $ 45 4% $ 2,326 $2,212 $ 114 5% Noninterest income 462 428 388 34 8 74
Slide 4: 2Q19 highlights
2Q19 highlights Underlying net income available to common of $440 million, up 4%, with EPS of $0.96 up 9% YoY(1) ─ Underlying ROTCE of 12.9%(1) relatively stable YoY and QoQ ─ TBV/share of $30.88 up 12% YoY and 4% QoQ Revenue of $1.6 billion up 8% YoY and 3% QoQ Improving ─ NII up 4% YoY with earnin
Slide 5: 2Q19 Underlying financial summary
2Q19 Underlying financial summary(1) 2Q19 change from Highlights 2Q19 1Q19 2Q18 1Q19 2Q18 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) up 3%, and
Slide 6: Net interest income
Net interest income $s in millions, except earning assets Net interest income Highlights Linked quarter: NII increased $6 million, or 1%, as the benefit of day count, $146.3B $140.5B $142.2B $143.8B $145.5B interest earning asset growth and improved mix was partially offset by a modest decrease in n
Slide 7: Noninterest income
Noninterest income $s in millions 2Q19 change from Highlights Underlying, as applicable 2Q19 1Q19 2Q18 1Q19 2Q18 Linked quarter: $ % $ % Service charges and fees $ 126 $ 123 $ 127 $ 3 2 % $ (1) (1) % Noninterest income up $34 million, or 8%, with record results in Card fees 64 59 60 5 8 4 7 Mortgage
Slide 8: Underlying noninterest expense
Underlying noninterest expense(1) $s in millions Highlights 2Q19 change from Linked quarter: Underlying, as applicable 2Q19 1Q19 2Q18 1Q19 2Q18 $ % $ % Underlying noninterest expense increased $12 million, Salaries & employee benefits $ 505 $ 508 $ 453 $ (3) (1)% $ 52 11 % or 1% Equipment & software
Slide 9: Average loans and leases
Average loans and leases $s in billions Average core loans and leases YoY loan growth Highlights $114.2B $116.1B $116.3B Total core $111.0B $112.2B Linked quarter: 5% Core loans and leases relatively stable, up $262 million ─ Loan growth was 0.4% before the impact of 1Q19 and 2Q19 loan sales, in con
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 $136.4B Linked quarter: $130.7B $132.7B Fed funds, repo, $1.2 $0.7 $0.9 ST borrowed funds $0.7 $1.4 Total deposits up $2.7 billion, or 2% $14.7 $12.4 $14.3 $15.6 ─ Largely reflect
Slide 11: Strong credit-quality trends continue
Strong credit-quality trends continue $s in millions Highlights Overall credit quality remains strong, reflecting YoY improvement in retail and commercial Nonperforming loans risk profiles NPLs to loans and leases ratio of 0.66% was stable with 1Q19 and improved from 0.75% in 2Q18 $845 $832 $797 $78
Slide 12: Capital and liquidity remain strong
Capital and liquidity remain strong as of Highlights $s in billions (period-end) 2Q18 3Q18 4Q18 1Q19 2Q19 Capital levels remain at the higher end of the range for (1) Basel III basis regional peers Common equity tier 1 capital $ 14.6 $ 14.4 $ 14.5 $ 14.4 $ 14.6 2Q19 CET1 ratio of 10.5% stable with 1
Slide 13: Strategic initiatives update
2Q19 YOY Strategic initiatives update Strategic & business highlights Grow more attractive Consumer- core education, personal unsecured and merchant risk-adjusted financing up 16%. Commercial- continue to recycle capital Balance Sheet return portfolios toward higher return relationships, Industry Ve
Slide 14: Launching a significant TOP 6 Program
Launching a significant TOP 6 Program Embarking on an ambitious journey to transform how we operate and deliver for customers and colleagues - expected to deliver ~$300-$325 million in pre-tax run-rate benefit by YE2021 > The Program will consist of two elements ─ The transformational program is des
Slide 15: Launching a significant TOP 6 Program: targeted run-rate benefits
Launching a significant TOP 6 Program Selected examples Program expected to deliver $300-$325 million in pre-tax run-rate benefit by YE2021 Transformation Program Targeted pre-tax run-rate benefits Advance next-gen IT Evolve customer interaction YE2020 YE2021 Redesign go-to-market model ~$100-$125 m
Slide 16: 3Q19 outlook
3Q19 outlook 3Q19 Underlying outlook 2Q19 Underlying results(1) (includes the impact of acquisitions and excludes expected notable items) Net interest $1,166 million Broadly stable income Noninterest $462 million Up modestly income Noninterest $944 million Broadly stable expense Credit trends, $97 m
Slide 17: Key messages
Key messages Citizens 2Q19 results highlight disciplined execution and continued momentum ─ Delivered EPS growth 9% YoY on Underlying basis(1) ─ 58.0% efficiency ratio on Underlying basis(1) ─ Positive operating leverage YoY on Underlying basis before Acquisitions(1) ─ 12.9% ROTCE on Underlying basi
Slide 18: Appendix
Appendix 3* Citizens Financial Group, Inc.” 18
Slide 19: 2Q19 YTD Underlying financial summary
2Q19 YTD Underlying financial summary(1) 2019 2018 YoY 2019 change from 2018 Underlying (1) (1) $s in millions Underlying Underlying before Acquisitions(1) Highlights $ /bps % Net interest income $ 2,326 $ 2,212 $ 114 5% 5% YTD 2019 vs YTD 2018: Noninterest income 890 759 131 17 7% Underlying net in
Slide 20: 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 $684 8% $113.4 $116.8 3% 1.19% 3 bps $634 1.16% 2Q18 2Q19 2Q18 2Q19 2Q18 2Q19 Net income available to Period-end deposits Return on average tangible common shareholders
Slide 21: Highly disciplined on credit: diversified and granular core loan mix
Highly disciplined on credit: diversified and granular core loan mix $s in billions 2019 Bank Holding Company-run loss rate of 4.1% on loan portfolio improved by 50 bps relative to 2018(1) Super prime/prime-focused, core retail portfolio; Granular/diverse core commercial portfolio; refreshed FICOs i
Slide 22: Notable Items
Notable Items(1) Several items have been excluded from reported results to better reflect Underlying operating results. First and second quarter 2019 results reflect notable items related to integration costs primarily tied to the August 1, 2018 Franklin American Mortgage Company (“FAMC”) acquisitio
Slide 23: GAAP noninterest income and noninterest expense summary
GAAP noninterest income and noninterest expense summary $s in millions GAAP 2Q19 change from Noninterest Income 2Q19 1Q19 2Q18 1Q19 2Q18 $ % $ % Service charges and fees $ 126 $ 123 $ 127 $ 3 2 % $ (1) (1) % Card fees 64 59 60 5 8 4 7 Capital markets fees 57 54 48 3 6 9 19 Trust and investment servi
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: 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 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: 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 29
Slide 30: 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 31: 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 32: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Q2 2019 Earnings Presentation on 6ix