Citizens Financial Group Inc at RBC Capital Markets Global Financial Institutions Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : And -- so with that, gentlemen, we have some questions that we'd like to ask, and we'll get some questions from the audience possibly a little later on. But maybe first, John, we were just talking briefly about this. Let's start with the environment. There's a lot of wildcards going on, a lot of crosscurrents with the new administration, what we heard last night with tariffs, the rate outlook. What are you hearing from your customers, both the consumers and the commercial customers? Are they on edge? Or what's the sense you're getting from them?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Yes. No. And just speaking on the consumer side, you guys obviously have residential mortgage production. And if this 10-year continues to come down, to your point a moment ago, none of us were thinking refinancing business was going to come back with the 10-year going to five. And now if it breaks down under four and not to say we'll go there. What are you guys hearing anything yet from your folks on the front lines about refinancing activity? Or is it too early for that?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Got it. Very good. In fact, maybe you can talk to when -- since Citizens has been public back in 2014, if I recall, the capital markets business has been building throughout that period. Obviously, you have been part of that growth. Can you share with us what differentiates Citizens Capital Markets today versus maybe when you first started, but also against your competitors today?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Speaking on the private capital, the PE business as it's often referred to, sponsors obviously have portfolio companies, as we all know. And many of us are anticipating that there's going to be an opportunity for them to monetize those investments that they've had in those portfolios. But it's been kind of -- they've got it off to a slow start, but what's holding it back do you think, well, what do we need to see the really see that activity maybe pick up?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Got it. And sticking with private capital for a moment. Some of your competitors have done partnerships or joint ventures with private capital. What's your thoughts about that? And then also, how competitive is that environment where you do get into with the partnerships with the PE firms?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Coming back to the capital markets franchise in its entirety, not just private equity, what are the big opportunities that you see for Citizens over the next three to five years and how you can grow this business out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 3:00PM, CFG.N - Citizens Financial Group Inc at RBC Capital Markets Global Financial Institutions Conference

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Got it. Very good. John, coming back to you. Citizens has some real good ROTCE targets that you guys have laid out, 16% to 18%, which is very attractive for investors, of course. Can you share with us the path you're going to use to get there? And then how confident are you reaching it. But also, what are the risks that you have to keep an eye on as well?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Got it. And we were saying to investors that it's been 20 years since we've had the front end of the curve around 3.75%, 4% with a positive slope. Now we don't have it literally today, but we did. How powerful I mean that -- for net interest income for a lender, that kind of condition is pretty good.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Got it. How -- you've laid out a very strong organic way of getting there. How does M&A play a role in reaching there? Is it part of it or it doesn't really matter?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : You touched on the capital in your answer. Can you guys give us your view of what's going on in Washington from the regulatory standpoint? How it appears things are changing, particularly with the stress test, I mean, your stress capital buffer appears to be -- it is higher than many of your peers. What are your thoughts about Basel III endgame, possibly being a lot softer or lighter than what was originally proposed in '23? What do you --

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Sure. You guys have talked about your medium-term net interest margin being between 3.25% and 3.5%. Can you share with us what gets you there? I assume some of the terminated swaps will be part of that, of course. And then if the Fed just stays pat and doesn't move from here, how does that influence your thinking on that margin?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Bringing it to near term with the quarter, I know we're only two months beyond -- going into the third month of the first quarter. How is it shaping up for you guys relative to your expectations? Any update you'd like to give us?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Yes. Ted, coming back to M&A. Do you think M&A begets M&A, meaning if we start to see some high-profile deals in the next 3 months, is that, in your experience, bring others to the table saying, you know what, we better get moving.