8-KOther EventsExhibits & Filings

CITIZENS FINANCIAL GROUP INC/RI 8-K Report, Corporate Update (Feb 3, 2020)

Filed February 3, 2020For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) filed an 8-K on February 3, 2020, reporting on its fourth quarter and full year 2019 results. For the fourth quarter of 2019, the company reported net income of $450 million, a slight decrease from the prior year's quarter, with earnings per share of $0.98, a slight increase. Full-year 2019 net income was $1.7 billion, flat compared to 2018, but diluted EPS saw an 8% increase to $3.81. The report highlights the impact of a challenging rate environment on net interest margin, which decreased by 19 basis points year-over-year. However, this was offset by strong growth in noninterest income, particularly from mortgage banking, capital markets, and foreign exchange activities. Key strategic initiatives and financial health indicators were also presented. The company announced an 8% increase in its quarterly cash dividend to $0.39 per common share, underscoring a commitment to returning capital to shareholders. Asset quality remained strong with a low nonperforming loans to loans ratio of 0.59% and a healthy allowance coverage of 178%. Capital ratios, including the Common Equity Tier 1 ratio of 10.0%, remained robust and well above regulatory requirements. The company is also progressing with its TOP 6 efficiency program, aiming for significant pre-tax run-rate benefits by year-end 2021.

Key Highlights

  • 1Fourth quarter 2019 net income was $450 million, down 3% year-over-year, with EPS of $0.98, up 2%.
  • 2Full year 2019 net income was $1.7 billion (flat YoY), while full-year EPS rose 8% to $3.81.
  • 3Net interest margin (NIM) declined 19 basis points year-over-year to 3.06% due to a challenging rate environment.
  • 4Underlying noninterest income increased 16% in Q4 2019, driven by strong mortgage banking, capital markets, and foreign exchange performance.
  • 5The company declared an 8% increase in its quarterly cash dividend to $0.39 per common share.
  • 6Credit quality remained strong, with the nonperforming loans to loans ratio at 0.59% and robust allowance coverage of 178%.
  • 7Common Equity Tier 1 (CET1) capital ratio stood at a solid 10.0%, exceeding regulatory requirements.

Frequently Asked Questions

The decrease in net interest margin (NIM) was primarily attributed to a challenging interest rate and yield curve environment, which impacted loan yields and securities premium amortization. Despite a 4% growth in interest-earning assets, the lower rates compressed the margin.

Noninterest income showed strong performance, increasing by 17% year-over-year to $494 million. This growth was significantly boosted by record results in capital markets, foreign exchange and interest rate products, along with strong contributions from mortgage banking and trust and investment services fees.

Citizens Financial Group is actively pursuing efficiency initiatives. The TOP 5 program achieved its targeted pre-tax run-rate benefit, and the ongoing TOP 6 program aims for approximately $300-$325 million in pre-tax run-rate benefits by the end of 2021. These programs focus on cost savings and operational improvements.

Citizens Financial Group is committed to returning capital through dividends and share repurchases. In the fourth quarter of 2019, they returned $558 million to shareholders through repurchases and dividends. Furthermore, the board declared an 8% increase in the quarterly cash dividend to $0.39 per common share, and for the full year 2019, $1.84 billion was returned to shareholders.