Citizens Financial (US:CFG)2026-01-21 15:02Financial Data and Key Metrics Changes - The company reported a 19% increase in EPS for 2025, reaching $3.86, compared to the previous year [5][12] - Net interest income (NII) increased by 9% year-on-year, with a net interest margin (NIM) expansion of 20 basis points [5][12] - The company achieved a positive operating leverage of 1.3% sequentially and 5.2% year-on-year [4][5] - The return on tangible common equity (ROTC) for the fourth quarter was 12.2% [13] Business Line Data and Key Metrics Changes - The private bank contributed $0.10 to EPS in Q4, with deposits reaching $14.5 billion and loans totaling $7.2 billion [12][23] - Wealth management fees increased by 22% year-on-year, while capital markets fees rose by 9% [12][13] - The company reduced non-core assets from $6.9 billion to $2.5 billion over the year [5][12] Market Data and Key Metrics Changes - Total spot deposits increased by approximately 2% to $183 billion, with non-interest-bearing balances up 2% [18][19] - The company maintained a CET1 ratio of 10.6% and returned $1.4 billion to shareholders, representing 80% of earnings [21][22] 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 driving revenue benefits [7][24] - The outlook for 2026 includes expectations of strong revenue performance, controlled expenses, and significant positive operating leverage [9][26] - The company aims to grow private bank deposits to $18-$20 billion and loans to $11-$13 billion by 2026 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a favorable macro environment for 2026, projecting GDP growth and stable unemployment [8][9] - The company anticipates two Fed rate cuts in 2026, with a stable regulatory environment [8][9] - Management highlighted the importance of organic growth over acquisitions in the near term [8] Other Important Information - The company achieved a cumulative interest-bearing deposit beta of about 48% by year-end [14] - The "Reimagine the Bank" initiative is expected to deliver approximately $450 million in pre-tax run rate benefits by the end of 2028 [25] Q&A Session Summary Question: Insights on the "Reimagine the Bank" initiative - Management indicated that the program has about 50 work streams and is expected to improve customer experience and reduce attrition [33][36] Question: Changes in deposit betas and NIM outlook - Management noted that the market has become less aggressive in pricing, leading to a beta drop to high 40s, while maintaining confidence in NIM due to strong non-interest-bearing balance growth [40][42] Question: Loan growth guidance and balance sheet optimization - Management highlighted strong growth drivers in the private bank and commercial banking, with a significant reduction in non-core assets contributing to positive sentiment on loan growth [47][50] Question: Fee growth assumptions - Management provided a conservative fee growth guidance of 6%-8% for 2026, citing strong performance in capital markets and wealth management [63][66] Question: Capital management and CET1 ratio - Management expressed optimism about potential changes in the stress test outcomes, which could allow for a reduction in the CET1 ratio towards medium-term targets [70][72]