Fixed Income Investor Presentation. May 2018

Transcription

1 Fixed Income Investor Presentation May 2018

2 Forward-looking statements and use of key performance metrics and non-gaap financial measures This document contains forward-looking statements within the Private Securities Litigation Reform Act of Statements regarding potential future share repurchases and future dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words believes, expects, anticipates, estimates, intends, plans, goals, targets, initiatives, potentially, probably, projects, outlook or similar expressions or future conditional verbs such as may, will, should, would, and could. Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense; The rate of growth in the economy and employment levels, as well as general business and economic conditions, and changes in the competitive environment; Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals; Our ability to meet heightened supervisory requirements and expectations; Liabilities and business restrictions resulting from litigation and regulatory investigations; Our capital and liquidity requirements (including under regulatory capital standards, such as the U.S. Basel III capital rules) and our ability to generate capital internally or raise capital on favorable terms; The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and Management s ability to identify and manage these and other risks. In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or share repurchases will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries), and any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends. More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the United States Securities and Exchange Commission on February 22, Key Performance Metrics and Non-GAAP Financial Measures and Reconciliations Key Performance Metrics: Our management team uses key performance metrics (KPMs) to gauge our performance and progress over time in achieving our strategic and operational goals and also in comparing our performance against our peers. We have established the following financial targets, in addition to others, as KPMs, which are utilized by our management in measuring our progress against financial goals and as a tool in helping assess performance for compensation purposes. These KPMs can largely be found in our periodic reports which are filed with the Securities and Exchange Commission, and are supplemented from time to time with additional information in connection with our quarterly earnings releases. Our key performance metrics include: Return on average tangible common equity (ROTCE); Return on average total tangible assets (ROTA); Efficiency ratio; Operating leverage; and Common equity tier 1 capital ratio. In establishing goals for these KPMs, we determined that they would be measured on a management-reporting basis, or an operating basis, which we refer to externally as Adjusted or Underlying results. We believe that these Adjusted or Underlying results provide the best representation of our financial progress toward these goals as they exclude items that our management does not consider indicative of our ongoing financial performance. KPMs that contain Adjusted or Underlying results are considered non-gaap financial measures. Non-GAAP Financial Measures: This document contains non-gaap financial measures. The appendix presents reconciliations of our non-gaap measures. These reconciliations exclude Adjusted or Underlying items, which are included, where applicable, in the financial results presented in accordance with GAAP. Adjusted or Underlying results, which are non-gaap measures, exclude certain items, as applicable, that may occur in a reporting period which management does not consider indicative of on-going financial performance. The non-gaap measures presented in the appendix include reconciliations to the most directly comparable GAAP measures and are: noninterest income, total revenue, noninterest expense, pre-provision profit, total credit-related costs, income before income tax expense, income tax expense, effective income tax rate, net income, net income available to common stockholders, other income, salaries and employee benefits, outside services, amortization of software expense, other operating expense, net income per average common share, return on average common equity and return on average total assets. We believe these non-gaap measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our Adjusted or Underlying results in any period reflect our operational performance in that period and, accordingly, it is useful to consider our GAAP results and our Adjusted or Underlying results together. We believe this presentation also increases comparability of period-to-period results. Other companies may use similarly titled non-gaap financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-gaap financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-gaap measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP. 2

3 Overview Company overview and strategy Improving financial performance Capital/funding and liquidity Risk management 3

4 Company overview and strategy

5 Key investment highlights Attractive, client-centric franchise with scale 13 th largest retail bank holding company in the U.S. with a strong competitive position in a well-diversified geographic footprint Attractive business mix with improving profitability Client-centric model focused on deepening customer relationships Strong, clean balance sheet supports growth plans 1Q18 CET1 ratio at higher end of range of peers Relatively stable, largely retail, deposit base Solid asset quality through credit cycles Path to improving financial profile Intense focus on strategic and tactical priorities to support prudent growth with improving asset mix and returns Focus on driving continuous improvement Prudently optimizing balance sheet, capital structure and risk profile to deliver improving risk-adjusted returns 5

6 Solid franchise with leading positions in attractive markets $153.5 billion in total assets (1) Robust deposit market share of 12% in top 10 MSAs (2) #2 deposit market share in New England (2) Diverse economies/affluent demographics CFG corporate headquarters Providence, RI CFG branch location CFG non-branch location Serve 5 million+ individuals, institutions and companies In Footprint Retail Deposit Services Mobile/Online Banking Mortgage (6) Home Equity Loans/Lines Credit/Debit Card Wealth Management Business Banking Auto Franchise capabilities reach beyond our traditional footprint Consumer National Education Finance Unsecured & Installment Lending Commercial Strength in Footprint and National Reach Corporate Banking Commercial Real Estate Franchise Finance Asset Finance PE/Sponsor Finance Healthcare/Technology/ Oil & Gas/Not-for-Profit verticals Capital Markets Global Markets Mergers and Acquisitions Treasury Solutions Commercial Deposit Services 2.6 million retail households ~3,300 Commercial clients (3) ~17,500 colleagues (1) ~1,150 retail branches (1) ranked #12 (4) ~3,300 ATM network (1) ranked #7 (4) #7 ranked Overall Middle Market lead/joint lead bookrunner (5) 1) As of March 31, ) Source: FDIC June 2017 and SNL Financial. Top MSAs determined by retail branch count. Branches with $500 million in deposits excluded. Excludes non-retail banks as defined by SNL Financial. The scope of non-retail banks is subject to the discretion of SNL Financial, but typically includes: industrial bank and non-depository trust charters, institutions with more than 20% brokered deposits (of total deposits), institutions with more than 20% credit card loans (of total loans), institutions deemed not to broadly participate in the banking services market and other non-retail competitor banks. 3) Commercial credit client count as of July 31, ) SNL Financial as of 4Q17. 5) Thomson Reuters LPC, Loan syndication league table ranking for the prior twelve months as of 1Q18 based on number of deals for Overall U.S. Middle Market (defined as Borrower Revenues < $500 million and Deal Size < $500 million). 6) Mortgage includes select originations outside the traditional branch banking footprint. 6

7 Substantial progress in prudently growing the balance sheet Top 5 deposit market share in 9 of 10 largest MSAs (4) $90.9 billion $108.7 billion (11) (11) Q18 20% 28% 80% 72% Total loans and leases (3) $80.3 billion 2012 $108.9 billion 1Q18 (11) (11) Dimension (1) Rank (2) Assets: $153.5 billion #13 Loans: $111.4 billion (3) #12 Deposits: $115.7 billion Mortgage: $17.3 billion Education: $8.3 billion HELOC: $13.3 billion #11 nationally; Top 5 rank in 9/10 markets (4) #13 nationally (5) Top 4 rank nationally (6) Top 5 rank: 9/9 markets (7) Digital adoption 42% (8) 43% 57% 45% 55% Consumer customer experience 1 st highest among banks (9) Commercial client satisfaction 94% (10) Consumer Commercial 1) CFG data as of March 31, ) Ranking based on 4Q17 data, unless otherwise noted; excludes non-retail depository institutions, includes U.S. subsidiaries of foreign banks. 3) Period-end balances. Excludes held for sale. 4) Source: FDIC, June Excludes non-retail banks as defined by SNL Financial. The scope of non-retail banks is subject to the discretion of SNL Financial, but typically includes: industrial bank and non-depository trust charters, institutions with more than 20% brokered deposits (of total deposits), institutions with more than 20% credit card loans (of total loans), institutions deemed not to broadly participate in the banking services market and other non-retail competitor banks. 5) Inside Mortgage Finance Publications, Inc. Copyright Ranking based on origination volume as of 1Q17. 6) CFG estimate, based on published company reports, where available; private student loan origination data as of 3Q17. 7) According to Equifax; origination volume as of 2Q17. 8) Non-branch retail deposit transactions as of 1Q18. 9) 2018 Temkin Experience Rating, U.S. March )Top 2 Box score. Barlow Research )Period-end balances. Reflects loans and deposits in our business operating segments, Consumer and Commercial. Consumer/Commercial deposit and loan mix percentages exclude non-core loans and brokered deposits in Other. 7

8 Improving financial performance 8

9 Making consistent progress against our financial goals Strong execution against all strategic initiatives and continued momentum ROTCE (1) (Return on average tangible common equity) Medium-term target Efficiency ratio (1) Medium-term target 12.3% ~13-15% 68.5% 68.7% 67.6% ~52-56% 4.3% 6.7% 6.1% 6.7% 6.4% 7.7% 7.6% 9.8% 68.1% 66.5% 63.9% 63.8% 60.9% 60.0% 3Q13 (2) Q13 (2) ROTA (1) (Return on average total tangible assets) 1.15% EPS (1) (Diluted EPS) $ % 0.71% 0.65% 0.68% 0.65% 0.76% 0.75% 0.91% $1.04 $1.55 $1.42 $1.61 $1.55 $1.97 $1.93 $2.58 3Q13 (2) Reported results Adjusted/Underlying results (1) (2) 3Q13 annualized Outlook remains positive to drive continued improvement for all stakeholders; goal is to be a top-performing bank ) Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in the appendix of this presentation for an explanation of our use of these metrics and non- GAAP financial measures and their calculation and/or reconciliation to GAAP financial measures, as applicable. 2) Commencement of separation effort from RBS. 9

10 Delivered attractive balance sheet and revenue growth FY17 vs. FY16 A strong platform well-positioned to drive value Strong loan growth (Average total loan growth) Growing revenues faster (Total revenue growth) Strong NIM expansion (Net interest margin change) 5.7% vs Peers 247 bps 9.9% 8.6% 8.5% vs Peers 13 bps 369 bps 16 bps 20 bps vs Peers 4 bp 3.2% 6.2% CFG Peer average CFG Peer average CFG Peer average Robust NII growth (Net interest income growth) 11.0% 9.8% vs Peers 123 bps Fee income growth (Noninterest income growth) 6.9% 6.3% vs Peers 383 bps Asset-sensitive balance sheet (+200 bps gradual increase over forward curve (3) ) Peer data as of most recent 10-K filing 5.0% vs Peers 190 bps 8.3% 276 bps 395 bps 3.1% 2.5% 2.9% CFG Peer average CFG Peer average CFG Peer median CFG GAAP CFG Adjusted/Underlying (1) Peer average GAAP Peer average Adjusted (2) Source: CapIQ and Company filings. Peers include BBT, CMA, FITB, KEY, MTB, PNC, RF, STI and USB. 1) Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in the appendix of this presentation for an explanation of our use of these metrics and non-gaap financial measures and their calculation and/or reconciliation to GAAP financial measures, as applicable. Adjusted or Underlying results exclude restructuring charges, special items and/or notable items, as applicable. 2) Where disclosed, peer results adjusted for unusual or special revenue, expense and acquisition items. 3) Reflects net interest income sensitivity to forward yield curve changes. CFG data as of 1Q18. Peer data based on public disclosures as of 4Q17 10-K filing. Peer data utilizes a +200 basis point gradual increase above the 12-month forward curve except PNC and STI, which disclose +100 basis point gradual increase and +200 basis point shock. PNC and STI estimated based on the disclosed data. 10

11 Continued focus on expense control and improving returns FY17 vs. FY16 Well-controlled expenses; investing for growth (Noninterest expense change) 5.3% vs Peers 169 bps Strong operating leverage (YoY Positive operating leverage (1) ) 6.8% vs Peers 179 bps Efficiency improvement (Efficiency ratio (1) change) CFG Peer average vs Peers 100 bps 3.6% 3.1% 2.8% 35 bps 5.0% 3.5% 3.2% 333 bps (293) bps (193) bps (201) bps 195 bps CFG Peer average CFG Peer average (396) bps Accelerating profitability (Net income available to common stockholders change) Improving ROA as assets grow (Return on average total assets change) Return on equity (Return on average tangible common equity (1) change) 58.9% vs Peers 3248 bps 37 bps vs Peers 17 bps 461 bps vs Peers 238 bps 28.3% 26.4% 16.8% 1150 bps 16 bps 20 bps 13 bps 3 bps 219 bps 223 bps 147 bps 72 bps CFG Peer average CFG Peer average CFG Peer average CFG GAAP CFG Adjusted/Underlying (1) Peer average GAAP Peer average Adjusted (2) Source: CapIQ and Company filings. Peers include BBT, CMA, FITB, KEY, MTB, PNC, RF, STI and USB. 1) Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in the appendix of this presentation for an explanation of our use of these metrics and non-gaap financial measures and their calculation and/or reconciliation to GAAP financial measures, as applicable. Adjusted or Underlying results exclude restructuring charges, special items and/or notable items, as applicable. 2) Where disclosed, peer results adjusted for unusual or special revenue, expense and acquisition items. 11

12 Further opportunities to improve returns: BSO Since 3Q13, delivered ~740 basis points of improvement in ROTCE to 11.7% (1) Balance Sheet Optimization ( BSO ) Improve risk-adjusted returns and NIM while driving growth Enterprise-wide initiative with the same intensity and rigor as our TOP efficiency programs Recycle capital into more accretive growth and relationship categories given our improved return profile Grow higher-return assets Reposition/optimize select assets Optimize deposit mix with a focus on lower-cost categories Positioned for continuing benefit from asset sensitive position as rates rise Capital Strong capital position Well-positioned to grow the balance sheet and increase capital return to shareholders 1) Please see important information on Key Performance Metrics and Non-GAAP Financial Measures at the beginning and in the appendix of this presentation for an explanation of our use of these metrics and non-gaap financial measures and their reconciliation to GAAP financial measures. 12

13 Targeting higher return and deeper relationship lending Consumer High Returns Low Low Purchased Retail Organic Auto Asset Finance (Legacy) LOWER return & strategic value Evaluation of loan portfolio Unsecured Product Financing Partnerships CRE Mid-Corporate Medium Personal Unsecured Franchise Business Banking Organic Student Asset Finance (Front Book) Potential to develop primary bank relationships MODERATE return & strategic value MSR Salable Mortgage Middle Market Credit Card Industry Verticals Home Equity Portfolio Mortgage HIGHER return & strategic value High Grow Education and Unsecured lending; reduce Auto Utilize FinTech relationship and SBA to enhance Business Banking Further expand in-footprint Home Equity market share Further invest in direct-toconsumer mortgage channel and improve conforming mix Commercial Continue to deepen Midcorporate and Middle Market relationships while expanding and further penetrating in Southeast, Midwest and NYC Expand and enhance industrybased expertise Improve Commercial Real Estate client penetration with top developers in core geographies Reposition non-core assets including Asset Finance Note: Size of bubble denotes 2017 estimated loan concentration 13

14 Targeting lower cost relationship-oriented deposit base Consumer Low Evaluation of deposits Consumer MMKT Consumer and Commercial DDA Consumer CWI Personal Savings Data & analytics drive personalized targeting across products Targeted mobile and digital acquisition Opportunity to acquire lower-cost deposits by closing gap with peer marketing spend Cost Pooled Government* FI Government DDA Treasury Commercial MMKT Commercial CWI Promo Consumer CD Consumer Relationship CDs Commercial Upgrading cash management platform with targeted launch in 4Q18 Upgraded AccessEscrow platform and added resources to further specialize in escrow-related services High Low Medium Strategic value High Targeting select companies in deposit-rich industry segments HIGHER cost & LOWER strategic value MODERATE cost & strategic value LOWER cost & HIGHER strategic value Note: Size of bubble denotes 2017 estimated deposit concentration *Does not include core cash management services 14

15 Remain rate sensitive Interest rate sensitivity ranking (200 bps gradual increase) 9.0% 5.9% 5.4% 5.0% 4.0% 3.1% 2.1% 2.1% 1.7% 1.2% Net interest income positioned to continue to benefit from rising rates Our asset sensitivity of 5.0% compares with 5.1% at 4Q17 and 6.0% at 1Q17 CMA RF PNC CFG KEY BBT MTB FITB USB STI Interest rate sensitivity trend 6.0% 5.5% 5.4% 5.1% 5.0% 3.9% 3.0% 3.5% 3.1% 1Q17 2Q17 3Q17 4Q17 1Q18 CFG Peer median Note: CFG Data as of 1Q18. Peer data as of 4Q17. Peer banks include BBT, CMA, FITB, KEY, MTB, PNC, RF, STI and USB. Peer estimates based on the public disclosures as of the most recent quarter available and utilizes a 200 basis point gradual increase above 12-month forward curve except PNC, which is based on a 100 basis point gradual increase and STI, which is based on a 200 basis point shock. PNC and STI excluded from peer median. 15

16 Further opportunities to improve returns: Growth in fee income businesses Fee Income Consumer Commercial Wealth Investments in FCs and sales, technology platforms and products with shift toward managed money SpeciFi robo-advisor product Business Banking Fundation FinTech partnership to automate small business underwriting Mortgage Capital & Global Markets Broaden capabilities in DCM, M&A, CRE New FX options/currency swaps platform and capabilities Treasury Solutions Replatforming cash management system Investments in trade finance, merchant services and commercial card Remix toward direct-to-consumer and conforming product Further leverage servicing platform Organic growth orientation, with potential for selective fee-based acquisitions 16

17 Further opportunities to improve returns: TOP Continuous improvement - TOP programs Self-fund investments through efficiency, expense discipline and mindset of continuous improvement Use new technologies to deliver more effective outcomes at lower costs TOP IV program on track to deliver run-rate pre-tax benefit of $95-$110 million by end of 4Q18 Revenue Initiatives (selected examples) New Channels: Using digital as a sales engine, building out direct to consumer mortgage, and leveraging the call center to offer service to solutions Expanding into Growth Areas: Next wave of corporate partnerships (Vivint, TBA) and expanding C&I lending in growth markets Build-out Fee Income Capabilities: Scaling M&A advisory (Western Reserve), building our Commercial Securitization, and scaling MSR purchases Efficiency Initiatives (selected examples) Organization Simplification: Focusing on spans and layers, centralization/centers of excellence, and role clarity Lean/Process Improvement: Redesigning end-to-end processing and leveraging automation to reduce costs and improve outcomes Vendor/Indirect Spend: Further vendor efficiencies and demand management (e.g., market data) Customer Journeys (revenue + efficiency): Simplifying and streamlining external customercentric processes Targeting strong positive operating leverage to self-fund growth initiatives 17

18 Strategic initiatives update Fee growth Balance Sheet Optimization Foundational Capital Consumer Commercial Grow higher risk-adjusted return portfolios Reposition select portfolios Optimize deposit mix Enhance Mortgage platform Expand Wealth Expand Cap/Global Mkts capabilities Build out Treasury Solutions NIM up 20 bps YoY with ~7 bps due to our overall BSO efforts Core Education, personal unsecured and merchant financing up 35% YoY; renewed SOFI flow agreement CRE originations of $604 million with coupon up 40 bps YoY; Industry Vertical loans up 13% YoY Optimizing Auto and Asset Finance portfolios; core yields up 31 bps and 26 bps YoY, respectively Targeting increased DDA and improving mix toward lower cost deposits Conforming mix 45% in 1Q18; seeing positive traction with direct-to-consumer channel; adding MSRs Wealth fee-based sales mix 42% in 1Q18, up from 36% in 1Q17; Fee-based investment sales up 17% YoY M&A Advisory and equity underwriting up $6 million YoY; Capital Mkts pipelines robust entering 2Q Added over 20 FTE YoY in sales, product and technology to support growth; Commercial card fees up 25% YoY driven by strong comparable increase in purchase volume TOP IV Program efficiency & revenue initiatives on track to deliver end of 4Q18 run-rate pre-tax benefit of $95-$110 million Streamline functions and processes - Implement Lean and Agile ways of working Leverage enhanced data analytics/transformative technology - APIs, robotics, cloud Continue capital normalization Announced quarterly dividend increase of 22% to $0.22 per share beginning in 1Q18 Returned $283 million to common shareholders in 1Q18, including dividends and repurchases Strategic & business highlights Citizens Global Finance ranks Citizens Best Bank in Northeast and Great Lakes Regions for 2018 Consumer Citizens Bank ranked #1 in Temkin Customer Experience Ratings (1) for U.S. banks More than 100,000 Citizens customers registered for Zelle P2P payments Opened first flagship banking and wealth center in Boston MSA Commercial Launched asset-backed securitization lending capability to enhance and build new client relationships Entered strategic partnership to refer CRE clients for long-term permanentfinancing opportunities 1) 2018 Temkin Experience Rating, U.S. March

19 Capital/funding and liquidity

20 Plans to adjust capital structure but remain above peers Total capital comparison (1) Highlights FITB 10.6% 15.2% Continue to maintain strong CET1 capital position relative to our peers MTB CFG BBT CMA Peer avg RF 11.0% 11.2% 10.2% 11.7% 10.5% 11.1% 14.8% 13.9% 13.9% 13.8% 13.8% 13.8% Expect annual normalization of ~30-40 bps given both capital return and strong loan growth Expect peers to move towards 8% 10% over time Increased quarterly common dividend by a further 22% in 1Q18 Dividend and repurchase policy Target 35-40% dividend payout; attractive yield Continue to repurchase shares each quarter, while being sensitive to valuation PNC 10.4% 13.7% STI 9.7% 13.1% USB KEY 9.3% 10.2% Common equity tier 1 Preferred equity 12.9% 12.9% CFG medium-term CET1 target ~ % Peer publicly-stated CET1 targets (2) BBT ~10.0% PNC ~ % FITB ~9.5% RF ~9.5% KEY ~9.0% - 9.5% STI <9.0% MTB low end of peers USB 8.5% Peer Avg ~9.2% Additional tier 1 (3) Tier 2 1) Source: SNL Financial. CFG data as of 1Q18. Peer data as of 4Q17. Based on regulatory data. Per the final transition provision rule issued by banking regulators on November 21, 2017, U.S. Basel III Standardized ratio definitions impacting risk weighted assets and qualifying U.S. Basel III Standardized Capital fully phased in as of January 1, ) Capital targets from company earnings calls, company disclosures and CFG estimates. As of 2/8/18. 3) Additional tier 1 capital in select peer instances comprises instruments other than preferred stock. 20

21 Average Loans and Leases Average core loans and leases $105.5B $106.8B $107.3B $108.4B $109.2B YoY Loan Growth Total Core 4% Linked quarter: Highlights Average core loans and leases up $686 million, or 1%; up 1% on a period-end basis Total core commercial loans and leases $51.0 $51.5 $51.3 $51.5 $51.8 Total Core Commercial 2% Core retail loans up $431 million, or 1%, largely reflecting growth in residential mortgage, education and unsecured Core commercial loans up $345 million, or 1%, driven by strength in Industry Verticals and the impact of geographic expansion strategies, partially offset by a planned reduction in the Asset Finance portfolio Total loan yields improved 15 basis points given the impact of continued mix shift toward higher returning categories and higher short-term rates Prior-year quarter: Total core retail loans $54.6 $55.3 $56.1 $57.0 $57.4 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 $s in billions; yield % $ % $ % $ % $ % $ % Core retail loans $ % $ % $ % $ % $ % Core commercial loans % % % % % Loans held for sale % % % % % Total core loans and LHFS $ % $ % $ % $ % $ % Total Core Retail 5% Average core loans and leases up $3.7 billion, or 4%; up 4% on a period-end basis Core retail loans up $2.8 billion, or 5%, driven by strength in residential mortgage, unsecured and education Core commercial loans up $821 million, or 2%, driven by strength in Private Equity, Commercial Real Estate and Industry Verticals, as well as the impact of geographic expansion strategies, partially offset by a planned reduction in the Asset Finance portfolio Total loan yields improved 47 basis points given the impact of continued mix toward higher returning categories and higher short-term rates Total non-core loans % % % % % Total average loans and LHFS $ % $ % $ % $ % $ % 21

22 Average funding and cost of funds $s in billions Total long-term borrowings Fed funds, repo, ST borrowed funds Term deposits Checking with interest DDA Average interest-bearing liabilities and DDA $126.2B $127.5B $127.5B $128.6B $129.1B $12.4 $13.6 $12.2 $11.7 $13.5 $3.8 $3.1 $2.4 $3.1 $2.1 $14.2 $15.1 $16.0 $16.5 $16.5 $20.7 $21.8 $21.9 $21.5 $21.7 $28.1 $27.5 $28.0 $28.9 $28.5 Money market & savings $47.0 $46.4 $47.0 $47.0 $46.7 1Q17 2Q17 3Q17 4Q17 1Q18 Linked quarter: Highlights Total average deposits remained relatively stable despite seasonality Largely reflects growth in checking with interest and savings more than offset by a reduction in money market and demand deposits Total deposit costs remained well-controlled at 0.52%, up 6.5 bps despite the impact of higher interest rates Total cost of funds increased 9 bps, reflecting continued normalization of our liabilities structure, including issuance of $750 million in senior debt, and rising rates Prior-year quarter: Average total deposits up $3.5 billion, or 3% Reflects strength in term, checking with interest, savings and demand deposits, partially offset by lower money market balances Total deposit costs increased 20 bps as the impact of higher rates was partially offset by growth in lower-cost categories and continued pricing discipline Total cost of funds increased 25 bps, reflecting the impact of the shift toward a more balanced mix of long-term and shortterm funding along with the impact of higher interest rates Deposit cost of funds 0.32% 0.37% 0.43% 0.45% 0.52% Total cost of funds 0.49% 0.56% 0.63% 0.65% 0.74% 22

23 High-quality investment portfolio $s in billions Investment portfolio Highlights Total HTM Total AFS Yield $26.1 $ % $0.9 $0.9 $0.8 $0.8 $4.1 $3.7 $0.4 $0.3 $8.6 $8.5 $11.1 $11.8 1Q17 US Agency AFS Private Label AFS Private Label HTM 1Q18 US Govt Guarnt AFS US Govt Guarnt/Agency HTM Fed Agency and Other Stock Investment portfolio ratings distribution Yield 2.62% 93% U.S. Agency MBS 3% AAA-rated non-agency 18% of total earning assets, in line with peers Primary goal is to provide a source of highquality liquid assets 46% are Level 1 High-Quality Liquid Assets qualifying 47% are Level 2A High-Quality Liquid Assets qualifying Secondary objective is to optimize for yield Average effective duration of the fixed income securities portfolio is 4.4 years Average life of fixed income securities portfolio is 5.8 years with minimal credit risk U.S. Government Guaranteed Non-Agency AAA FHLB, Federal Reserve Stock 3% 3% Non-Investment Grade 1% 46% 47% GSE Fannie Mae and Freddie Mac Note: Data based on historical amortized cost as of March 31,

24 Strong deposit base, with opportunities to grow stable deposits cost-effectively $113.4 billion 1Q18 average deposits Term 12% 38% Savings & Money Market 82% Core (1) Wholesale 6% 25% 19% Cost of deposits: 0.52% (2) Demand Checking with Interest Expect through-the-cycle interest-bearing deposit betas of ~60% 1Q18 cumulative beta of 24% since 3Q15 Consumer Data & analytics drive holistic and personalized customer targeting models across all programs and products Executing targeted mobile and online digital customer acquisition Utilizing targeted direct-mail offers in lieu of mass promotions Launched pilot for in-branch offers Customer-data models focus on relationship, volume and persistence of deposits Improves customer experience Deliver deposit growth at improved efficiency Opportunity to acquire lower-cost deposits by closing the gap with peer marketing spend in specific markets Commercial Upgrading cash management platform with targeted launch in 4Q18 Upgraded our AccessEscrow platform and added resources to further specialize in escrow-related services Adding deposit product specialists to support relationship bankers Targeting select companies in deposit-rich industry segments 1) Core excludes term and wholesale deposits. 2) Annualized costs of deposits for the three months ended March 31,

25 Targeting a more peer-like funding structure 18.2% 15.5% 15.0% Total Borrowings/Total Liabilities (1) 12.7% 12.1% 11.8% 11.7% 8.6% 8.3% 8.2% 7.4% PNC FITB BBT KEY USB Peer Avg CFG STI MTB RF CMA FHLB advances Fed funds purchased Commercial paper Senior debt/other Repurchase agreements sold Trading liabilities Subordinated notes and debentures Continue to broaden funding base with a goal of further enhancing stability and resiliency To diversify our liquidity options and maintain a conservative risk profile, we have issued $8.0 billion in senior bank debt since December 1, 2014; $7.3 billion outstanding as of March 31, 2018 As we broaden our investor base and market access, we will continue to opportunistically issue in order to supplement our funding sources Fully compliant with LCR requirement (2) 1) Source: SNL Financial, based on regulatory data as of 12/31/2017, CFG data is as of 3/31/18. 2) Based on the September 2014 release of the U.S. version of the Liquidity Coverage Ratio (LCR). Note that as a modified LCR company, CFG s minimal LCR requirement of 100% began in January

26 Risk management

27 Strong credit-quality trends continue $s in millions Core c/o ratio Provision for credit losses, net charge-offs $96 $ % $70 $75 $72 $ % 0.24% $83 $78 $78 $ % 0.26% 1Q17 2Q17 3Q17 4Q17 1Q18 Provision for credit losses Net c/o ratio Total net c/os 0.32% 0.23% 0.24% 0.27% 0.25% Highlights Overall credit quality remains strong, reflecting growth in lower-risk retail portfolios and a stable risk profile in commercial NPLs to total loans and leases ratio of 0.78% remained relatively stable with 4Q17 and improved from 0.97% in 1Q17 NPLs of $868 million remained relatively stable with 4Q17, as a decrease in retail more than offset an increase in commercial Net charge-offs of $70 million, or 0.26% of average loans and leases, decreased $8 million from 4Q17 and $17 million from 1Q17 Commercial net recovery of $3 million improved $22 million YoY Retail net charge-offs of $73 million up modestly YoY Provision for credit losses of $78 million decreased $5 million from 4Q17 despite an $8 million reserve build; YoY results reflect strong portfolio credit quality and lower net charge-offs Allowance to total loans and leases of 1.12% remained relatively stable Allowance to NPL coverage ratio improved to 144% from 142% in 4Q17 and 117% in 1Q17 Nonperforming loans $1,050 $1,025 $932 $871 $868 Allowance for loan and lease losses $1,224 $1,219 $1,224 $1,236 $1, % 142% 144% 117% 119% 0.97% 0.94% 0.85% 0.79% 0.78% 1.13% 1.12% 1.11% 1.12% 1.12% 1Q17 2Q17 3Q17 4Q17 1Q18 NPLs NPLs to loans and leases 1Q17 2Q17 3Q17 4Q17 1Q18 Allowance for loan and lease losses (1) NPL coverage ratio Allowance to loan coverage ratio 1) Allowance for loan and lease losses to nonperforming loans and leases. 27

28 Diversified and granular loan mix $58.6 billion 4Q17 retail portfolio $52.0 billion 4Q17 commercial portfolio (3) Non-Core Credit Cards Other 5% 3% 2% Education Finance 13% Indirect Auto 23% 25% 29% Residential Mortgage Home Equity 23% 15% 37% 25% Out of footprint (1,2) Midwest Mid-Atlantic New England CRE Business Banking Non-Core Leases 5% 5% 2% 26% 62% C&I 34% 12% 32% 22% Out of footprint (1,2) Midwest Mid-Atlantic New England Weighted-average FICO score of % collateralized 76% of the consumer real estate portfolio is secured by a 1 st lien Highly granular and diversified portfolio in terms of geography, industry, asset class and rating CFG vs. Peers (4) Retail NCO% Retail NPL% Commercial NCO% Commercial NPL% 0.6% 0.6% 0.5% 0.6% 0.5% 0.6% 0.4% 0.4% 0.4% 0.5% 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.2% 0.1% 0.1% 0.1% 0.9% 0.8% 0.7% 0.8% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 CFG Peers 1) Source: Company data. Portfolio balances loan category, NCO and NPL data, FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of December 31, 2017, as applicable. 2) Footprint defined as 11-state branch footprint (CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI & VT) and contiguous states where CFG maintains offices (IL, IN, KY, MD & ME). 3) Commercial portfolio product data based on Federal Reserve Board product definitions. 4) Source: SNL Financial. Product view - regulatory reporting basis. Peer banks include CMA, BBT, FITB, KEY, MTB, PNC, RF, STI and USB. NPL% equals nonaccrual loans plus 90+ days past due and still accruing loans (excluding FDIC covered loans and loans guaranteed by the U.S. government) as a % of total. 28

29 At Citizens, we continue to smartly grow our balance sheet $ billions $89 $96 Total loans (1) $103 $ % 3.37% 3.32% 3.51% 23% Good loan growth with rising yields Loan yields Loan portfolio returns 22% 21% 22% 25% 14% Return on loan book regulatory capital improving (2) % Stressed losses 5.1% 4.8% 4.8% 17% Stress losses as a % of loans down (3) ) Average loan balances. 2) Reflects after-tax return calculated as loan interest income/regulatory capital. 3) Total loan losses as a percentage of the total loan book based on FRB Severely Adverse Scenario 9-quarter horizon for 2014, 2015, 2016 and

30 Appendix Risk management

31 Core retail portfolio Highlights Weighted-average core FICO score of % of the retail portfolio has a FICO score of >750 Core Mortgage weighted-average portfolio FICO of 782 and CLTV of 62% 4Q17 originations of $1.7 billion with weighted-average FICO of 769 Auto Finance Purchase only, no leasing, weighted-average portfolio FICO of % new-car loans 4Q17 originations of $1.4 billion with weighted-average FICO score of 750 and weighted-average yield of 4.38% Education Lending 95% of InSchool loans co-signed with weighted-average portfolio FICO of 774 4Q17 InSchool originations of $74 million with weighted-average FICO of 767 and 95% co-sign rate 4Q17 organic refinance product originations of $295 million with weighted-average FICO of 788 Education Finance by Product type by Geography by refreshed FICO Other Cards Auto 14% 23% 5% 3% 29% 26% 4Q17 $57.4 billion core retail portfolio (1) Mortgage Home Equity Out of Footprint Midwest 22% 15% New England Mid-Atlantic % 29% $s in billions % <600 3% % % 19% Period-end loans $43.2 $47.4 $50.7 $54.5 $57.4 Average loans $42.9 $45.1 $48.9 $52.3 $ Day past due % 2.53% 2.31% 2.13% 1.87% 2.01% 60-Day past due % 1.81% 1.60% 1.41% 1.11% 1.08% NPL % 2.31% 1.68% 1.53% 1.02% 0.93% NCO % 0.68% 0.55% 0.50% 0.47% 0.47% 25% Note: excludes $1.2 billion of non-core loans, including $761 million of home equity, $254 million of education and $136 million of residential mortgage. 1) Portfolio balances as of December 31, Based on most current available FICO scores and collateral value. Loan term, lien position, risk rating, property type, industry sector and geographic stratifications current as of December 31, 2017, as applicable. 31

32 Re-balancing retail loan mix to drive improved risk-adjusted returns Retail loan performance Average balances; $ in billions $54.2 $51.3 $46.7 $ % 95% 91% 94% 4.63% 2.94% 2.14% 2.43% $ % 0.73% Loan Loss Loan Loss rate Mix (1) rate Mix (1) Core resi mortgage 18% 0.38% 28% 0.04% Core home equity Auto Education Core education refi Core Inschool (2) Unsecured (3) Core all other Total core retail 91% 0.68% 98% 0.47% 0.68% 0.55% 0.50% 0.47% 0.47% Total retail loss rate 1.03% 0.70% 0.58% 0.53% 0.47% Non-core home equity 6% 4.47% 1% (0.54)% Non-core education % 5.58 Non-core other retail % (0.31) Total non-core retail 9% 4.63% 2% 0.73% Total retail 100% 1.03% 100% 0.47% Core loan portfolio Core loan loss rate Non-core loan portfolio Non-core loan loss rate Consistent loan growth over 2013 to 2017 of 5.1% CAGR Paced by growth in high-quality mortgage, student, auto Yields up, return on capital up, charge-off trend favorable, stress losses down Expect average retail loss rates to remain relatively stable in 2018 and in the mid- to high- 50 bps range through ) Shown as % of retail assets. 2) FFELP loans are included in InSchool. 3) Unsecured includes PERL, credit card and product financing Results reflect the reclassification of a $175 million legacy unsecured portfolio from Core all other to Unsecured. 32

33 Core mortgage portfolio overview Highlights 4Q17 $16.9 billion core mortgage portfolio Jumbo mortgages originated primarily within the Bank s lending footprint by Refreshed CLTV (1) by Refreshed FICO (1) Predominately in-footprint with a weightedaverage refreshed FICO score of 782 and CLTV of 62% 4Q17 originations of $1.7 billion with weighted-average FICO of 769 and LTV of 76% OREO portfolio of 76 units at $9 million % 3% 80-89% 6% 26% 71-79% 65% <70% > % 32% < 600 1% % 5% % Origination detail (2) $s in millions $2,220 $1,655 $1,951 $1,875 $1,687 $s in billions % 77% 73% 74% 76% Q16 1Q17 2Q17 3Q17 4Q17 Period-end loans $9.0 $11.5 $12.6 $14.9 $16.9 Average loans $8.6 $10.3 $12.0 $13.8 $ Day past due % 4.68% 3.44% 2.58% 1.80% 1.81% 60-Day past due % 3.16% 2.52% 1.89% 1.20% 1.05% NPL % 3.66% 2.64% 2.30% 0.88% 0.70% NCO % 0.38% 0.16% 0.07% 0.08% 0.04% Origination volume WA FICO WA LTV 1) Portfolio balances as of December 31, Based on most current available FICO scores and collateral value. Loan term, lien position, risk rating, property type, industry sector and geographic stratifications current as of December 31, 2017, as applicable. 2) Portfolio and secondary originations. Excludes treasury purchases. 33

34 Core home equity portfolio (1) Highlights 4Q17 $13.5 billion HELOC 4Q17 $1.4 billion HELOAN 53% of the portfolio is secured by 1 st lien Weighted-average FICO of % has an LTV of less than 80% 4Q17 HELOC originations of $1.6 billion Weighted-average FICO score of 787 and a weighted-average CLTV of 66.7% 54% of originations are first-lien 1st by Lien position 52% 42% 48% by Refreshed FICO > 800 < 600 3% % % 17% 2nd by Lien position (2) (2) (2) st by Refreshed FICO > % 37% 35% < 600 8% % 12% (2) 2nd WA FICO % WA FICO % 16% $s in billions Period-end loans $20.1 $18.7 $17.1 $15.9 $14.9 Average loans $20.7 $19.4 $17.2 $16.5 $ Day past due % 2.53% 2.71% 2.76% 2.53% 2.69% 60-Day past due % 1.91% 2.06% 2.09% 1.88% 1.87% NPL % 2.93% 2.41% 2.35% 2.13% 2.04% NCO % 0.66% 0.47% 0.34% 0.15% 0.13% 70-79% by Refreshed LTV 93% with LTV <80% 93% with LTV <80% % 80-89% 6% 1% 17% 76% (2,3) <70% by Refreshed LTV (2,3) % 100% % 4% 2% 71-79% 1% 8% 85% <70% 1) As of December 31, Excludes serviced by other portfolio. 2) Portfolio balances as of December 31, Based on most current available FICO scores and collateral value. Loan term, lien position, risk rating, property type, industry sector and geographic stratifications current as of December 31, 2017, as applicable. 3) LTV based on refreshed collateral values and assumes that any undrawn borrowing capacity is fully funded. 34

35 HELOC payment shock management Highlights Between , $3.2 billion in drawn balances ($3.7 billion of undrawn balances) are scheduled to mature, or 23%, of the total drawn HELOC balances Weighted-average FICO of 763, and CLTV of 56% with 49% secured by 1 st lien In no single year is the maturing population balance greater than $1.0 billion 2% 3% 3% 23% 34% Maturing vintages as of December 31, $1.26 billion 2016 $916 million 2017 $1.09 billion 35% 27% 3% 2% 3% 28% 37% 2% 3% 1% 29% 23% 42% Proactive mitigation efforts Initiated comprehensive mitigation plan to manage exposure and assist customers through reset by offering alternative financing/forbearance options Begin reaching out two years in advance of maturity dates Policies, procedures and monitoring requirements; guidance on TDR/collateral dependency recognition Enhanced product to maximize customer options new 30-year, high-ltv HE loan product Proactive assessment of unused lines before maturity to manage higher-risk customers $13.4 Charged-off 30+ Delinquent Loan modification Maturity schedule as of December 31, 2017 $s in billions ($1.0) ($0.4) ($0.9) Maturing Population: ($0.9) 49% Sr. Lien; 95% <80% CLTV; 68% >740 FICO 98% <80% CLTV or >740 FICO Current without changes Paid off CFG refinance $10.2 (1) Total O/S ) Includes serviced by other portfolio. 35

36 Auto portfolio credit metrics Highlights (1) 4Q17 $13.2 billion Auto portfolio Auto Finance portfolio purchase only, no leasing, weighted-average FICO score of 728 4Q17 originations of $1.4 billion with weighted-average FICO score of % of the portfolio has a FICO score of greater than 680, 53% < 72 months and 62% are new-car loans 76- to 84-month term originations have a weighted-average FICO score of 769 by Refreshed FICO score (1,2) < 620 > 800 9% 20% % 28% % % new car 62% % % by Origination LTV 120% 80% 18% 14% 22% 13% 14% 19% (2) 90-99% 80-89% by Term (2) (months) % 21% 12% % Auto + SCUSA Originations $s in billions $1.4 $1.3 $1.4 $1.4 $1.3 $0.2 $0.0 $0.1 $1.3 $1.3 $1.4 $1.2 $s in billions Period-end loans $9.4 $12.7 $13.8 $13.9 $ % 36% Average loans $8.9 $11.0 $13.5 $14.0 $ % 99% 100% 98% 98% 30-Day past due % 0.52% 0.83% 1.35% 1.74% 2.48% 60-day past-due % 0.12% 0.21% 0.39% 0.44% 0.71% 4Q16 1Q17 2Q17 3Q17 4Q17 NPL % 0.18% 0.17% 0.30% 0.36% 0.53% Organic Auto SCUSA NCO % 0.06% 0.20% 0.51% 0.68% 0.80% (2) WA FICO (2) WA LTV 1) Assumes that for loans where refreshed FICO score information not available, the balance stratification is consistent with the remainder of the portfolio. 2) Portfolio balances as of December 31, Based on most current available FICO scores and collateral value. Loan term, lien position, risk rating, property type, industry sector and geographic stratifications current as of December 31, 2017, as applicable. LTV calculated utilizing actual invoice amount or Kelley Blue Book value. 36

37 Core education finance portfolio overview Highlights 4Q17 $7.9 billion core education finance portfolio Core education finance portfolio weighted-average FICO score of 777 and co-sign rate of 46% by Refreshed FICO (1) by Segment (1) 95% of InSchool loans co-signed with weighted-average FICO of 774 4Q17 InSchool originations of $74 million with weightedaverage FICO of 767 and 95% co-sign rate > % < 620 1% % 16% % Education Refinance Total organic refinance portfolio of $3.4 billion with weighted-average FICO of 784 4Q17 organic refi product originations of $295 million with weighted-average FICO of 788 SoFi purchased portfolio balance of $1.9 billion with weighted-average FICO of % Traditional InSchool 29% Origination detail ($s in millions) Education refinance portfolio weighted-average life of ~4 years $s in billions Period-end loans $1.8 $1.9 $4.0 $6.3 $7.9 Average loans $1.5 $1.7 $3.0 $5.3 $ Day past due % 3.77% 1.13% 0.72% 0.53% 0.48% 60-day past-due % 2.55% 0.66% 0.43% 0.27% 0.25% NPL % 1.80% 0.53% 0.45% 0.25% 0.24% NCO % 0.53% 0.37% 0.41% 0.40% 0.41% Note: YoY delinquency and NPL improvement driven by sale of FFELP loans in 3Q Previous origination data was based on amounts disbursed to students per quarter and represented balance sheet loan growth. Current data represents full amounts originated per quarter that have been committed to borrowers. 1) Portfolio balances as of December 31, Based on most current available FICO scores and collateral value. Loan term, lien position, risk rating, property type, industry sector and geographic stratifications current as of December 31, 2017, as applicable. 780 $ $472 $394 $ $369 94% 92% 84% 97% 95% 33% 31% 31% 31% 34% 4Q16 1Q17 2Q17 3Q17 4Q17 InSchool ERL WA origination FICO InSchool co-sign rate ERL co-sign rate 37