10-KPeriod: FY2022

CITIZENS FINANCIAL GROUP INC/RI Annual Report, Year Ended Dec 31, 2022

Filed February 17, 2023For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported its full-year 2022 results, highlighting significant strategic growth through acquisitions, including HSBC branches and Investors Bancorp. While reported net income decreased year-over-year, largely due to integration costs and a higher provision for credit losses, "Underlying" results, which exclude notable items, showed stable net income. The company experienced strong revenue growth, driven by a substantial increase in net interest income, reflecting higher earning asset yields and broader loan and deposit growth, partially offset by increased funding costs. The efficiency ratio remained stable on a reported basis and improved on an underlying basis, indicating effective cost management. CFG also continued to return capital to shareholders through dividends and share repurchases, further demonstrating a commitment to shareholder value. The company's capital and liquidity positions remain robust, well above regulatory requirements, positioning it to navigate the current economic environment and pursue future growth opportunities.

Financial Highlights

40 data points
Beta

Revenue

$8.02B

Net Income

$2.07B

25.8% Net Margin

EPS (Diluted)

$4.10

Total Assets

$226.73B

Cash & Equivalents

$10.55B

Free Cash Flow

$4.12B

Financial Statements
Beta
Revenue$8.02B
Interest Expense$1.05B
Net Income$2.07B
EPS (Basic)$4.12
EPS (Diluted)$4.10
Shares Outstanding (Basic)475.96M
Shares Outstanding (Diluted)477.80M

Key Highlights

  • 1Total revenue increased by 33% to $8.0 billion, primarily driven by a 33% increase in net interest income, reflecting higher earning-asset yields and growth from acquisitions.
  • 2Underlying net income available to common stockholders was stable at $2.3 billion, while reported net income available to common stockholders decreased to $2.0 billion due to notable items of $352 million.
  • 3The efficiency ratio improved on an underlying basis to 57.5% from 59.8% in the prior year, demonstrating effective cost management despite integration costs.
  • 4Return on Tangible Common Equity (ROTCE) improved on an underlying basis to 16.4% from 16.0% in the prior year, indicating enhanced profitability relative to tangible equity.
  • 5Citizens successfully integrated the acquisitions of HSBC East Coast branches and Investors Bancorp, expanding its geographic footprint and customer base, particularly in the New York City and Mid-Atlantic regions.
  • 6The company repurchased $150 million in common stock and paid $779 million in common stock dividends during the year, demonstrating a commitment to returning capital to shareholders.
  • 7Capital ratios remain strong, with CET1 capital ratio of 10.0% and Tier 1 capital ratio of 11.1% at year-end, well above regulatory minimums.

Frequently Asked Questions

The acquisitions of HSBC's East Coast branches and Investors Bancorp significantly contributed to CFG's financial performance in 2022. These acquisitions drove a 17% increase in average interest-earning assets and a 14% increase in average deposits. While they also led to higher integration costs and a notable increase in goodwill, they expanded the company's reach and customer base, contributing positively to revenue growth, particularly in net interest income.

Citizens Financial Group's net interest income increased significantly in 2022, driven by higher earning-asset yields resulting from rising market interest rates and an expanded asset base from acquisitions. The company's balance sheet is asset-sensitive, meaning that rising interest rates are generally favorable to its net interest income. While funding costs also increased, the net interest margin on a FTE basis improved, indicating a positive benefit from the current rate environment, although future margin performance will depend on the pace of rate changes and deposit costs.

Citizens Financial Group is focused on operational efficiency, evidenced by its 'Tapping our Potential' (TOP) initiative. The company reported a stable efficiency ratio of 61.0% on a reported basis and an improvement to 57.5% on an underlying basis in 2022. This reflects effective cost management, with noninterest expense increasing primarily due to acquisition and integration costs. The company aims to continue improving efficiency to self-fund future investments and growth.

Citizens Financial Group maintains strong capital adequacy ratios, with CET1 capital ratio of 10.0% and Tier 1 capital ratio of 11.1% at December 31, 2022, well above regulatory minimums. The company also demonstrated its commitment to shareholder returns by repurchasing $150 million in common stock and paying $779 million in common stock dividends during 2022. Future capital distributions are subject to board approval, regulatory considerations, financial performance, and market conditions.