10-KPeriod: FY2017

CITIZENS FINANCIAL GROUP INC/RI Annual Report, Year Ended Dec 31, 2017

Filed February 22, 2018For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported solid financial performance for the year ended December 31, 2017. The company, the 13th largest bank holding company in the U.S., saw its net income increase significantly to $1.7 billion, up 58% from the previous year, driven by strong revenue growth of 9% and an 11% increase in net interest income. This growth was supported by a 6% increase in average loan balances and a 16 basis point improvement in net interest margin. The company's strategic initiatives, including a focus on customer-centricity and building excellent capabilities, appear to be yielding positive results. The Consumer Banking segment demonstrated robust growth with a 31% increase in net income, while the Commercial Banking segment also showed strong performance with a 23% increase in net income. The company also benefited from the 2017 Tax Legislation, which provided a significant tax benefit. CFG maintained a strong capital position, with its Common Equity Tier 1 (CET1) capital ratio at 11.2% as of December 31, 2017, well above regulatory minimums. The company also actively managed its balance sheet, including share repurchases and dividend payments, reflecting its commitment to returning value to shareholders while prudently managing its capital.

Financial Highlights

42 data points
Beta

Revenue

$5.71B

Net Income

$1.65B

28.9% Net Margin

EPS (Diluted)

$3.25

Total Assets

$152.34B

Cash & Equivalents

$3.03B

Free Cash Flow

$1.63B

Financial Statements
Beta
Revenue$5.71B
Interest Expense$747.00M
Net Income$1.65B
EPS (Basic)$3.26
EPS (Diluted)$3.25
Shares Outstanding (Basic)502.16M
Shares Outstanding (Diluted)503.69M

Key Highlights

  • 1Net income increased by 58% to $1.7 billion in 2017, driven by strong revenue growth.
  • 2Total revenue grew by 9% to $5.7 billion, with net interest income up 11% and noninterest income up 2%.
  • 3The Consumer Banking segment's net income grew by 31% to $452 million.
  • 4The Commercial Banking segment's net income increased by 23% to $774 million.
  • 5Return on average tangible common equity improved to 12.35% from 7.74% in the prior year.
  • 6The company maintained a strong CET1 capital ratio of 11.2%, exceeding regulatory requirements.
  • 7The effective income tax rate decreased significantly from 31.9% in 2016 to 13.6% in 2017, primarily due to the 2017 Tax Legislation.

Frequently Asked Questions

The primary driver of Citizens Financial Group's improved net income in 2017 was strong revenue growth, particularly in net interest income, combined with the favorable impact of the 2017 Tax Legislation which reduced the corporate tax rate.

Both the Consumer Banking and Commercial Banking segments showed significant improvement. Consumer Banking's net income increased by 31% to $452 million, while Commercial Banking's net income rose by 23% to $774 million. This indicates broad-based strength across the company's core business lines.

Citizens Financial Group maintained a strong capital position with a CET1 capital ratio of 11.2%, well above regulatory requirements. The company's 2017 Capital Plan, approved by the FRB, included plans for quarterly common dividends and share repurchases, indicating a commitment to returning capital to shareholders.

The Tax Cuts and Jobs Act of 2017 significantly lowered the corporate tax rate from 35% to 21%. This resulted in a substantial revaluation of the company's net deferred tax liability, leading to a $331 million net tax benefit and a significant reduction in the effective income tax rate for 2017.