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    CFG
    Earnings call· Dec 2025(Q4 FY25)

    CITIZENS FINANCIAL GROUP INC/RI CFG

    Jan 21, 2026 Source

    Executive summary

    Citizens Financial Group Q4 FY25 — Strong Performance Driven by NIM Expansion, Private Bank Growth, and Strategic Initiatives

    Citizens Financial Group concluded FY25 with a strong Q4, marked by significant net interest margin expansion and robust growth in its Private Bank and fee-generating businesses. The company is strategically focused on organic growth, driven by its 'Reimagine the Bank' initiative aimed at enhancing customer experience and efficiency, while maintaining disciplined expense management and a strong capital position. Management expressed confidence in achieving medium-term ROTCE targets, supported by continued NIM expansion and improving credit trends.

    Highlights

    5

    • Net interest margin expanded by 7 basis points sequentially in Q4 FY25, reaching 3.07%.

    • Private Bank finished FY25 with $14.5 billion in deposits, $10 billion in client assets, and $7.2 billion in loans, contributing 7% to pretax income, ahead of the 5% target.

    • EPS of $1.13 in Q4 FY25 was up 8% linked quarter and 36% year-on-year, with full-year EPS of $3.86, up 19% relative to FY24.

    • Fees were up 8% year-on-year in Q4 FY25, paced by strong Capital Markets and Wealth performance.

    • Achieved positive operating leverage of 1.3% sequentially and 5.2% year-on-year in Q4 FY25, with 125 basis points for the full year.

    Concerns

    3

    • Expenses were up 4.6% for the full year FY25, slightly above the 4% guide, due to fee performance-related incentive compensation and Private Bank/Wealth investments.

    • Capital Markets fees were down 16% linked quarter in Q4 FY25, with approximately $20 million of M&A and equity deals pushed into Q1 FY26 due to government shutdown impacts.

    • Reimagine the Bank initiative in FY26 expects $50 million of front-loaded one-time costs, partially offset by $45 million in benefits, resulting in a net cost impact.

    Guidance & targets

    23
    CategoryTargetConfidence
    Net Interest Income (NII) growth
    10% to 12%
    high materiality
    High
    Net Interest Margin (NIM) expansion
    4 to 5 basis points a quarter towards 3.25% in 4Q '26
    high materiality
    High
    Spot Loan Growth
    3% to 5%
    medium materiality
    High
    Average Loan Growth
    2.5% to 3.5%
    medium materiality
    High
    Overall Earning Assets Growth
    4% to 5%
    medium materiality
    High
    Non-Interest Income Growth
    6% to 8%
    high materiality
    High
    Expense Growth
    4.5%
    high materiality
    High
    Full Year Operating Leverage
    in excess of 500 basis points
    high materiality
    High
    Net Charge-Offs (NCOs)
    mid- to high 30s basis points
    medium materiality
    High
    CET1 Ratio
    10.5% to 10.6%
    high materiality
    High
    Share Repurchases
    $700 million to $850 million
    high materiality
    High
    Return on Tangible Common Equity (ROTCE)
    16% to 18%
    high materiality
    High
    Net Interest Margin (NIM)
    3.30% to 3.50%
    high materiality
    High
    Reimagine the Bank Program Pretax Run Rate Benefits
    approximately $450 million
    high materiality
    High
    Reimagine the Bank Program FY26 Net Impact
    net cost impact of $5 million
    medium materiality
    High
    Private Bank Deposits
    $18 billion to $20 billion
    medium materiality
    High
    Private Bank Loans
    $11 billion to $13 billion
    medium materiality
    High
    Private Bank Client Assets
    $16 billion to $20 billion
    medium materiality
    High
    Private Bank Earnings Contribution to EPS
    mid-teens
    medium materiality
    High
    Private Bank Return on Equity (ROE)
    20% to 25%
    medium materiality
    High
    Capital Markets Fees
    strong performance
    medium materiality
    High
    Net Interest Income (NII)
    lower due to day count
    low materiality
    High
    Expenses
    higher due to seasonal impacts
    low materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Private Bank
    Exceeded 5% pretax income target for FY25. Strong deposit and loan growth, with 10 wealth teams added since launch in FY23. Expects continued acceleration of growth in FY26.
    Deposits: $14.5 billion (FY25 end)Client Assets: $10 billion (FY25 end)Loans: $7.2 billion (FY25 end)ROE: 25% (FY25)EPS Contribution: $0.28 (FY25)EPS Contribution: $0.10 (Q4 FY25)Deposit Mix Noninterest-Bearing: 36% (FY25 end)Loan Growth: $1.2 billion (Q4 FY25, period-end)
    		———7% accretive to pretax income in 2025

    Operational metrics

    28
    Diluted EPS
    $1.13up 8% linked quarter, up 36% year-on-year
    Q4 FY25
    Diluted EPS
    $3.86up 19% relative to FY24
    FY25

    On an underlying basis.

    Total Capital Returned to Shareholders
    $326 million
    Q4 FY25
    Total Capital Returned to Shareholders
    $1.4 billion80% of 2025 earnings
    FY25
    Share Repurchases
    $600 millionrepresenting about 3% of outstanding shares at beginning of year
    FY25
    Tangible Book Value Per Share
    $38.07up $1.34 or 4% sequentially, up $5.73 or 18% year-over-year
    Q4 FY25
    Non-Core Assets Run-down
    $2.5 billionfrom $6.9 billion at beginning of year
    FY25 end

    Included a sale of a student loan portfolio.

    TOP 10 Program Run Rate Benefits
    $100 million plus
    Q4 FY25 exit

    Pretax run rate benefit.

    Interest-Bearing Deposit Costs
    down 15linked quarter
    Q4 FY25
    Total Deposit Costs
    down 12linked quarter
    Q4 FY25
    Cumulative Interest-Bearing Deposit Beta
    48%
    FY25 end

    Through the end of the year.

    Noninterest-Bearing Deposit Mix
    22%steady mix
    Q4 FY25

    Of the book.

    Low-Cost Deposit Mix
    43%
    Q4 FY25

    Increased to 43%.

    Stable Retail Deposits
    65%compared to peer average of about 55%
    Q4 FY25

    Of total deposits.

    CRE Office Portfolio Allowance Coverage
    10.8%
    Q4 FY25

    Maintained robust allowance.

    CRE Office Portfolio Expected Lifetime Loss Rate
    20%consistent with view for past year
    Q4 FY25
    CET1 Ratio (Adjusted for AOCI opt-out removal)
    9.5%increased
    Q4 FY25
    Private Bank Wealth Teams Added
    10
    Since launch in '23

    With more in the pipeline.

    Call Center AI Human Call Reduction Target
    50%
    Medium-term outlook

    Through modernizing tech stack and introducing voice AI.

    Engineer Productivity with AI Target
    5 to 10x
    Ongoing

    AI taking first crack at code writing, developers QA/QC, AI for testing.

    Commercial Real Estate (CRE) Balances Reduction
    down 4%linked quarter
    Q4 FY25

    And 10% for the year.

    Average Deposits Growth
    2%up $3.9 billion
    Q4 FY25

    Driven by growth in Private Bank, commercial, and retail.

    Total Spot Deposits Growth
    2%to $183 billion
    Q4 FY25
    Nonaccrual Loans
    down slightlylinked quarter
    Q4 FY25

    Driven by a decrease in commercial real estate.

    Criticized Balances
    continued to decline
    Q4 FY25
    Wealth AUM Growth (Mass Affluent)
    15%
    FY25

    55% of total AUM is in branch-based business.

    Wealth Fee Income Growth (Mass Affluent)
    25%
    FY25

    60% of total fee income is from mass affluent business.

    Wealth Advisers Growth
    50
    FY25

    In the branches.

    Industry KPIs

    13
    MetricValueDetails
    Loans—
    Deposits$183 billionUSD
    Rotce ROE12.2%%
    Cet1 ratio10.6%%
    Capital returns$326 millionUSD
    Fee income linesup 8%%
    Allowance reserves1.53%%
    Net interest income—
    Net interest margin3.07%%
    Net charge offs npls43 bpsbps
    Total operating expensesup 0.6%%
    Provision for credit lossesdown $25 millionUSD
    Efficiency ratio operating leverage62%%

    Risks & headwinds

    4
    Government shutdown impacting deal closuresQ4 FY25 to Q1 FY26

    Approximately $20 million of M&A and equity deals pushed from Q4 FY25 into Q1 FY26.

    Mitigation: These fees are expected to be recognized in Q1 FY26.

    Outsized Stress Capital Buffer (SCB) due to mis-modelingOngoing

    Described as a 'scarlet letter' and outsized compared to business model.

    Mitigation: Optimistic about changes afoot with the Fed and a better outcome; management has made points clear to new stress test leadership.

    General macro environment uncertaintyFY26

    Maintains CET1 ratio at the high end of 10.5-10.6% range due to uncertainty.

    Mitigation: Will consider migrating CET1 lower once profitability is proven and CRE is worked out, and environment is in a better place.

    Seasonal impacts on Q1 revenue and expensesQ1 FY26

    Lower day count impacting NII; FICA reset and compensation payouts impacting expenses.

    Mitigation: These are normal seasonal factors and are incorporated into guidance.

    What to watch in Q1 FY26

    5

    Private Bank Growth Targets

    FY26
    CurrentDeposits: $14.5B, Loans: $7.2B, Client Assets: $10B (FY25 end)
    TargetDeposits: $18B-$20B, Loans: $11B-$13B, Client Assets: $16B-$20B (FY26 end)

    Why it matters

    The Private Bank is an idiosyncratic growth driver and a key component of the company's organic growth strategy and medium-term ROTCE targets.

    Given the investments we have made and our plans to further expand the Private Bank in '26, we think deposits can grow to $18 billion to $20 billion, loans in the range of $11 billion to $13 billion and client assets $16 billion to $20 billion.

    Q&A highlights

    7

    How much of the 'Reimagine the Bank' benefits will hit the bottom line versus being reinvested, and does this increase confidence in the high end of the ROTCE target?

    Management stated the program has 50 workstreams with clear visibility on costs and benefits. While the gross run-rate benefit is clear, the flow-through depends on future investment needs. Historically, the company has shown high flow-through from such programs due to disciplined expense management and self-funding. The benefits are additive to the ROTCE target, but they are not yet committing to the high end.

    “I think it's still a bit of an open question as to how much of that flows through. And it kind of depends on kind of where we are at that point in time and what our investment needs and priorities could be.”

    asked by Ryan Nash · answered by Bruce Van Saun

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Initiatives and Private Bank Success

    Citizens Financial Group successfully executed strategic initiatives in FY25, notably the Private Bank which exceeded its targets, contributing 7% to pretax income against a 5% goal. This business achieved a 25% ROE for the year, driven by growth in deposits, client assets, and loans, and is expanding into new geographies and verticals. The company also made significant progress in running down non-core assets, reducing them from $6.9 billion to $2.5 billion.

    02

    Reimagine the Bank Program

    A new strategic initiative, 'Reimagine the Bank,' has been launched with approximately 50 initiatives aimed at enhancing customer experience, driving revenue benefits, and improving expense efficiency. The program is expected to deliver $450 million in fully phased-in pretax run rate benefits by the end of FY28, with about two-thirds from expense efficiencies. In FY26, it anticipates $50 million in one-time📎 costs offset by $45 million in benefits.

    03

    Favorable Macro Outlook and Rate Assumptions

    Management projects a favorable macro environment for FY26, with solid GDP growth, stable unemployment, and falling inflation. The outlook incorporates two Fed rate cuts (June and September), with the 10-year Treasury rate anchored around 4.25%. This rate path underpins the NII growth and NIM expansion guidance.

    04

    Capital Markets and Wealth Momentum

    The company expects continued strong performance in Capital Markets and Wealth businesses. Capital Markets benefits from a favorable backdrop, strong pipelines, and a carryover of approximately $20 million in fees from Q4 FY25 into Q1 FY26. Wealth continues its record-setting performance, driven by Private Bank growth, successful lift-outs, and strong branch-based business.

    05

    Credit Quality Improvement

    Credit trends are expected to continue improving in FY26, with net charge-offs projected in the mid- to high 30s basis points. The reduction in the CRE office portfolio and lower loss content from new originations are contributing to a better portfolio mix. The allowance for credit losses remains robust, with 10.8% coverage for the general office portfolio.

    06

    Capital Management and Shareholder Returns

    Citizens maintains a strong balance sheet with a CET1 ratio of 10.6% in Q4 FY25. The company plans to manage its CET1 ratio between 10.5% and 10.6% throughout FY26 and envisions share repurchases of $700 million to $850 million. In FY25, it returned $1.4 billion, or 80% of earnings, to shareholders, including $600 million in buybacks.

    07

    Loan Growth Drivers

    The projected loan growth of 3% to 5% for spot loans in FY26 is driven by idiosyncratic growth in the Private Bank, expansion in commercial banking (middle market, private capital, sponsor lines), and strong performance in consumer products like HELOC and mortgages. The reduction in non-core asset rundown and commercial real estate optimization will also lessen prior headwinds.

    AI-generated summary of the company’s earnings call. Not investment advice.