Citizens Financial (US:CFG)2025-10-15 14:00Financial Data and Key Metrics Changes - The company reported EPS growth of $0.13 sequentially, or 14% [3] - Net interest income (NII) grew by 3.5% sequentially, driven by a net interest margin (NIM) expansion of 5 basis points [3][8] - The Common Equity Tier 1 (CET1) ratio increased by 10 basis points to 10.7% [3][16] - The company achieved a positive operating leverage of 3% with expense growth held to just 1% [3][8] Business Line Data and Key Metrics Changes - The private bank had significant deposit growth, with spot deposits increasing by $3.8 billion to $12.5 billion [4][17] - The private bank contributed $0.08 to EPS this quarter, up from $0.06 in the prior quarter [9] - Capital markets delivered a record third quarter, marking the second-best performance ever [8][68] - Fee income increased by 5% sequentially and 18% year-over-year, driven by strong capital markets activity [10] Market Data and Key Metrics Changes - Average loan volume was up 1%, contributing to the 3.5% NII growth [8] - Non-interest-bearing deposits increased by about $1.5 billion or 4%, maintaining a steady mix at 22% of the total deposits [14] - The company maintained a stable interest-bearing deposit cost, translating to a cumulative down beta of 53% [14] Company Strategy and Development Direction - The company is focused on executing strategic initiatives, including the buildout of the private bank and private wealth platform [4][16] - The "Reimagine the Bank" initiative aims to improve customer service and operational efficiency, with expected net benefits starting in 2027 [5][19] - The company aims to build a premier bank-owned private bank and private wealth franchise, with a target of achieving a 16% to 18% return on tangible common equity (ROTCE) over time [21][22] Management's Comments on Operating Environment and Future Outlook - The macro environment remains positive despite uncertainties in fiscal and monetary policies [6] - Management expects continued attractive earnings growth in Q4, driven by positive operating leverage and favorable credit trends [6][21] - The company is well-positioned to sustain momentum into 2026, with a focus on executing its strategic agenda [6][22] Other Important Information - The Board of Directors declared a quarterly dividend of $0.46, reflecting a 9.5% increase [7] - The company executed $75 million in stock buybacks during the quarter [8][16] - The private bank achieved cumulative breakeven, covering investments made since its launch in 2023 [9] Q&A Session Summary Question: Expected margin trajectory and outlook - Management forecasts a margin of $305 for Q4, with expectations to reach the medium-term target of $325 to $350 [25][26] - Factors affecting the margin include time-based benefits and commercial loan pricing spreads [28][29] Question: Role of M&A in the company's strategy - The company is focused on organic growth through the private bank and is open to M&A opportunities if they meet high criteria [30][32] Question: Private bank outlook and AUM targets - Management is confident in achieving deposit growth but acknowledges that AUM targets may depend on the timing of liftouts [38][41] Question: Capital markets outlook - The company sees strong pipelines in capital markets, with diverse flows across M&A, bond, and equity pipelines [68][70] Question: Credit exposure and risks - The company maintains high credit quality in its private credit pools, with no losses reported related to recent bankruptcies [72][74] Question: Use of capital and dividend policy - The company plans to facilitate loan growth, continue dividend increases, and may repurchase shares with excess capital [82]