Citizens Financial Group Inc Q2 2023 Earnings Call Transcript

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

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : John, I was just wondering if you could help us with lots of the moving pieces that's sort of unfurling in front of us. So -- just I guess the first question is, you noted stability in the 3% -- at 3% level. Does that mean that fourth quarter 2024 will be at about the third quarter level? I'm just wondering sort of how those dynamics play out in terms of what you expect for how the balance sheet trends for the rest of the year. Or will sort of the runoff continue to pressure it at that level? And what is that -- what does that fourth quarter NII about look like from a range perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 19, 2023 / 1:00PM, CFG.N - Q2 2023 Citizens Financial Group Inc Earnings Call

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : '23. I'm building off of '24, John.

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : Got it. And so as I think about the fourth quarter, is it fair then to say that your guidance implies NII of $1.52 billion for the third quarter? So do we assume that we're at or around that range for the fourth quarter? And as we think about the puts and takes of 2024 -- and John, I have to bring this up because a few investors were noting, I think now it's Slide 31, where you have some swaps rolling off that have very heavy weighted average fixed rate that you're receiving. So as I think about $1.52 billion perhaps as a starting point, plus or minus, I assume that the -- your guide for down a 100 basis points NII for full year down 1.2% is still valid if we assume rate cuts next year and includes those swap roll-offs. So that's sort of the first question. And the second is, how does balance sheet optimization impact that sensitivity? So I'm assuming that's extraordinarily static. So -- and I'm assuming that from both sides, you're paying off more debt next year as you're awaiting for these loans to come on and then your -- as you wait for these loans, you're also putting it in higher yielding -- in cash. So if you could just help us think through the moving pieces as it relates to that original disclosure because I think investors are thinking about the potential for rate cuts next year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 19, 2023 / 1:00PM, CFG.N - Q2 2023 Citizens Financial Group Inc Earnings Call

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : Got it. And just to wrap it up, just because I got a few e-mails to clarify, and I'll step aside. It sounds like your sensitivity hasn't changed. So whatever that fourth quarter number is, which is stable to third quarter, the down 1.2% and down 100 is still valid. But then the balance sheet optimization will get you closer to stable despite Fed cuts?

Question: Erika Najarian - UBS Investment Bank, Research Division - Analyst : Yes, Bruce, that private bank lift-off is a boss move. I think everybody just wanted to figure out what that runway looks like. And I think this conversation we just had clarified that run rate.