Citizens Financial Group, Inc. Q4 FY2025 earnings call

• Strong Q4 and full-year 2025 results: net interest margin expansion, strong wealth and capital markets fees, positive operating leverage. - Private bank performance: $4.145B deposits, $10B client assets, $7.2B loans, 25% ROE in 2025. - Non-core assets reduced from $6.9B to $2.5B. Top 10 program delivered $100M pretax run rate benefit. - Launched Reimagine the Bank initiative to enhance customer experience and drive productivity/efficiency. - Full-year 2025 EPS $3.86, up 19% from 2024; expenses up 4.6% vs guide due to fee beat and private bank/wealth investment.

The private bank finished the year with $4.145 billion in deposits, $10 billion in client assets, and $7.2 billion in loans, contributing 7% accretive to pretax income in 2025 with a 25% ROE. Net interest margin expanded seven basis points. Net interest income (NII) was up 9% year on year, paced by a 20 basis point increase in net interest margin and 3% growth in spot loans. Fees were up 8% year on year, led by capital markets and wealth. Non-core assets were run down from $6.9 billion at the start of the year to $2.5 billion by year end.

• 2026 outlook: strong revenue, controlled expenses, significant operating leverage, lower credit costs. NII growth 10%-12% paced by NIM expansion and loan growth (private bank and C&I). Fees to continue growth. - Reimagine the Bank impact: $50M one-time costs vs $45M benefits in 2026. - CET1 ratio target 10.5%-10.6% in 2026. Share repurchases projected at $700M-$850M. - First quarter 2026 guidance considering seasonal impacts and deferred deals.

• Macro environment uncertainties, including potential Fed rate changes and inflation. - Regulatory risks, such as impact of stablecoin regulations. - Peer acquisitions could divert focus from organic growth agenda.

Q: Ryan Nash from Goldman Sachs asked about Reimagine the Bank's impact on earnings and NIM walk.

A: Bruce Van Saun discussed the program's execution, revenue benefits from improved customer experience, and NIM drivers including non-interest-bearing balances, asset sensitivity, and hedging actions.

Q: Erika Najarian from UBS inquired about loan growth guide and CRE optimization.

A: Bruce Van Saun and Don McCree/Brendan Coughlin talked about private bank growth, commercial expansion, and CRE run-downs contributing to loan growth.

Q: Manan Gosalia from Morgan Stanley asked about fee guidance and capital buybacks.

A: Bruce Van Saun and Annoy Banerjee addressed fee growth drivers, capital market pipelines, and hopes for SCB improvement impacting buybacks.

Q: Gerard Cassidy from RBC asked about private bank loan growth categories and LDR.

A: Brendan Coughlin detailed private bank loan growth across C&I, CRE, and residential, and discussed LDR trends.

Q: David Shibarini from Jefferies asked about AI spend and efficiency ratio.

A: Brendan Coughlin spoke about AI investments in call centers, engineering productivity, and fraud/credit analytics, and efficiency ratio drivers.

Q: Chris McGratty from KBW inquired about ROE guide and reserves.

A: Bruce Van Saun discussed ROE path and reserve conservatism.

Q: Ken Usdin from Autonomous Research asked about private bank's impact on expenses.

A: Bruce Van Saun talked about continued investment in private bank driving growth and operating leverage.