10-KPeriod: FY2021

CITIZENS FINANCIAL GROUP INC/RI Annual Report, Year Ended Dec 31, 2021

Filed February 23, 2022For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported a significant increase in net income for 2021 compared to 2020, driven by a substantial decrease in the provision for credit losses as the economy improved post-pandemic. Total revenue saw a slight decrease, primarily due to lower net interest income and non-interest income, but underlying operational performance showed resilience. The company continues to execute its strategic growth initiatives, including acquisitions, which are expected to enhance its franchise and expand its market presence. CFG maintains a strong capital position, with regulatory capital ratios well above minimum requirements. The company is also focused on digital transformation and enhancing customer experience across its consumer and commercial banking segments.

Financial Highlights

40 data points
Beta

Revenue

$6.65B

Net Income

$2.32B

34.9% Net Margin

EPS (Diluted)

$5.16

Total Assets

$188.41B

Cash & Equivalents

$9.16B

Free Cash Flow

$2.27B

Financial Statements
Beta
Revenue$6.65B
Interest Expense$339.00M
Net Income$2.32B
EPS (Basic)$5.18
EPS (Diluted)$5.16
Shares Outstanding (Basic)425.67M
Shares Outstanding (Diluted)427.44M

Key Highlights

  • 1Net income available to common stockholders increased by 132% to $2.2 billion in 2021, reflecting a strong recovery from the prior year impacted by COVID-19 related provisions.
  • 2Underlying Return on Tangible Common Equity (ROTCE) improved significantly to 15.98% in 2021 from 7.53% in 2020.
  • 3Total revenue decreased by 4% to $6.6 billion, impacted by lower net interest income (-2%) and non-interest income (-8%).
  • 4Provision for credit losses reversed to a benefit of $411 million in 2021, compared to an expense of $1.6 billion in 2020, indicating improved credit quality and economic outlook.
  • 5The company completed the acquisition of 80 East Coast branches from HSBC and announced a definitive agreement to acquire Investors Bancorp, strengthening its footprint and customer base.
  • 6Capital ratios remained strong, with Common Equity Tier 1 (CET1) capital at 9.9% and Tier 1 capital at 11.1% as of December 31, 2021, well above regulatory minimums.
  • 7The company is actively managing interest rate risk, with a reported asset-sensitive balance sheet that would benefit from rising interest rates.

Frequently Asked Questions

The primary driver for the substantial increase in net income in 2021 was the significant reduction in the provision for credit losses. The prior year's provision was heavily impacted by the economic uncertainty and potential credit deterioration associated with the COVID-19 pandemic. As the economic outlook improved in 2021, the company released a portion of these reserves, contributing to higher net income.

Citizens Financial Group is pursuing strategic acquisitions to expand its market presence and customer base. The acquisition of HSBC's East Coast branches and the pending acquisition of Investors Bancorp are expected to enhance the company's franchise, particularly in key northeastern markets like New York City and Philadelphia. These moves are anticipated to build scale, broaden offerings, and contribute to future growth and market share.

Citizens Financial Group maintains strong capital ratios, exceeding regulatory requirements, which provides a solid foundation for growth and shareholder returns. While the company has been actively repurchasing shares and paying dividends, future capital distributions are subject to board approval, financial performance, market conditions, and regulatory considerations, including capital buffer requirements.

The company actively manages its exposure to interest rate risk through various strategies, including managing the repricing characteristics of its assets and liabilities and utilizing interest rate swap contracts. The company's balance sheet is described as 'asset-sensitive,' meaning that an increase in interest rates is expected to positively impact net interest income, which is consistent with the current expectation of rising interest rates.