Citizens Financial (US:CFG)2026-01-21 15:00Financial Data and Key Metrics Changes - The company reported a 19% year-over-year increase in EPS, reaching $3.86 for 2025, with Q4 EPS up 8% sequentially and 36% year-over-year at $1.13 [4][10] - Net interest income (NII) increased by 9% year-over-year, with a net interest margin (NIM) expansion of 20 basis points [4][10] - The company achieved positive operating leverage of 1.3% sequentially and 5.2% year-over-year [3][4] - Total deposits increased to approximately $183 billion, with non-interest-bearing balances up 2% [17][18] Business Line Data and Key Metrics Changes - The private bank contributed significantly, with $14.5 billion in deposits, $10 billion in client assets, and $7.2 billion in loans, exceeding the 5% income target with a 25% ROE [3][22] - Wealth management fees rose by 22% year-over-year, while capital markets fees increased by 9% [10][11] - The company reduced non-core assets from $6.9 billion to $2.5 billion during the year [4][10] Market Data and Key Metrics Changes - The company anticipates solid GDP growth and stable unemployment in 2026, with inflation expected to decline [6][7] - The regulatory environment is projected to remain positive, with expectations of two Fed rate cuts [6][7] Company Strategy and Development Direction - The company is focused on executing strategic initiatives, including the "Reimagine the Bank" program aimed at enhancing customer experience and operational efficiency [5][6] - The private bank is expected to grow deposits to $18-$20 billion and loans to $11-$13 billion by 2026, with a target ROE of 20%-25% [23][24] - The company aims to achieve a medium-term ROTC target of 16%-18% by the second half of 2027 [6][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for 2026, expecting strong revenue performance and controlled expenses [7][29] - Credit costs are projected to improve, with net charge-offs expected to be in the mid to high 30s basis points [26][27] - The company plans to return a substantial amount of capital to shareholders, with share repurchases estimated at $700-$850 million [26][27] Other Important Information - The company achieved an 80% return of capital to shareholders in 2025, with $1.4 billion returned [20][26] - The tangible book value per share increased to $38.07, reflecting an 18% year-over-year growth [20] Q&A Session Summary Question: How much of the "Reimagine the Bank" benefits will hit the bottom line versus being reinvested? - Management indicated that the program has about 50 work streams and expects revenue benefits to increase over time, with implementation costs being one-time capital costs [30][32] Question: What is driving the change in deposit betas? - Management noted that the market has become less aggressive in pricing actions, leading to a decrease in deposit betas from low to mid-50s to high 40s [34][35] Question: Can you elaborate on the loan growth guide? - Management expressed confidence in loan growth driven by the private bank's scaling, commercial banking expansion, and strong demand in consumer banking [39][40] Question: What are the underlying assumptions for fee growth? - Management expects a 6%-8% growth in fees for 2026, driven by strong capital markets and wealth management performance, despite some caution due to market uncertainties [49][50]