Citizens Financial Group Inc Q3 2025 Earnings Call Summary

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

Question: Scott Siefers - Piper Sandler & Co - Analyst : Morning, everyone. Thanks for taking the question. Maybe, Chris, I was hoping you could spend just a moment discussing the expected margin trajectory sort of both near term and then toward the 3.25% to 3.50% medium-term target. I know the fourth quarter margin should come in around 3.05%, which is up, but sort of towards the lower end of the range, you all had discussed previously. So maybe just thoughts on how things are trending versus your expectations and then sort of the puts and takes as we go out beyond the fourth quarter in your mind? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call

Question: Scott Siefers - Piper Sandler & Co - Analyst : Perfect. That's good color and thank you. And then, Bruce, maybe it's sort of a broader top-level question, the ground seems to be shifting a little in the large regional space. I think since last quarter, where it looks like we're going to create a new category for name with one merger and then move another category 4 bank up to category 3 eventually. Any updated thoughts on the role M&A might play in the Citizens store over the next couple of years? Or is it still that you've got just plenty of organic runway that you'd rather sort of maintain that organic momentum?

Question: Dave Rochester - Cantor Fitzgerald - Analyst : Hey, good morning guys, nice quarter. Just quick on the Private Bank outlook. You reiterated the levels you talked about before in terms of loan deposit targets, AUM. You're already there in deposits. So it would be great to just hear your outlook there. Over the next quarter or the next year. And then in terms of AUM, it looks like there may be a little bit of a gap. If you could just talk to your confidence in hitting that target by the end of the year would be great.

Question: Dave Rochester - Cantor Fitzgerald - Analyst : Well, it all sounded good guys. I really appreciate that. Maybe just one last quick one. On Slide 22, I noticed you dropped your Fed funds range here by 25 bps, but you still kept the range -- the margin range intact the 3.25%, 3.50%. I know it seems like a small change, but the sensitivity of that the 3.25% to 3.50% is something investors have been asking about quite a bit. So I thought this was a positive that you reduced that the Fed funds, but you kept the margin range. So what kept the range the same? And then if you could give any color on the sensitivity of that range to Fed funds changes, that would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call Thanks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning. Just as a follow-up on the -- very quick on the sensitivity of the Fed funds to the margin. Bruce, you talked about the 10-year having coming down took -- has taken out some win from the back book repricing, is there a level that you're watching on the 10-year where it really begins to sort of hurt that [3.25%] medium-term sort of margin outlook that we should be aware of?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. And I guess just another one, looking at Slide 20, and I know we get a bigger update in January. But as we think about the onetime costs tied to this reimagining the bank and rearchitecting it. Any sense of just what cost save opportunities are there that could help fund that investment as all of us think about what expense growth could look like 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. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call Thanks.

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : Hi, good morning. I wanted to check in on the capital markets side. You noted its second best quarter ever, the best third quarter. I understand some deals were pushed from 3Q -- pushed to 3Q from 2Q. But can you talk about the pipeline that you're seeing today, what the outlook looks like going into 4Q and going into next year?

Question: Manan Gosalia - Morgan Stanley & Co Ltd - Analyst : That's very helpful. And then maybe if I can pivot over to credit. There's a lot of focus on the risks around private credit this quarter. You have a slide at the back where you showed that the exposure is about $3.3 billion. Can you give us some more color on what that exposure looks like and where you see potential risks and what you're broadly seeing there? Donald McCree - Citizens Financial Group Inc - Senior Vice Chairman of the Executive Board and Head of Commercial Banking Yeah. Why don't I pick up on that also. So the way we lend to the private credit complex is really through securitization structures. So it's very, very high credit quality with diversified pools of collateral. I haven't looked completely, but I don't think we've had any losses in our private credit pools related to any of the big headline kind of bankruptcies that have happened in terms of the underlying. But just think about it, we lend against 100 to 150 different collateral pools of individual credits, and we have very strong structures, very strong protections in terms of covenants collateral kickouts, visibility into the underlying structure. So we are -- and as you said, it's a very small portion of our overall book, but it's actually one of the highest quality things that we do across the entirety of the commercial bank. So I'm very comfortable with it. And the thing I always look at is are there structural degradations going on in terms of terms and conditions in terms of how people are lending into some of the private credit funds. We haven't seen it. And the structures are holding up pretty well so far. But most of these are 364-day lines. They're pretty short term, so we can adjust the book if we see anything that disturbs us pretty quickly. So --

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Great, good morning. Bruce, the 16% to 18% RTC over time, does -- I'm trying to connect the re-imagine the Bank benefits to the range that you've previously given. Does this -- do the benefits from this new plan, which will get in January, does that give you a bias to a certain part of the range or perhaps sooner realization? I'm just trying to connect it, too.

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Okay. So it's additive. I guess it's -- you're not announcing this plan because you're not on track to get it? This is gives you greater confidence that you're going to get there?

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Okay. And my follow-up is on just use of capital. You've talked about the earnings contribution of the private bank picking up. The loan growth is picking up. Any other, I guess, near to intermediate term uses of capital, either organic or inorganic that we might need to be thinking about? Thanks.

Question: John Pancari - Evercore Inc - Analyst : Good morning. Just on the expense front. I know you started the ongoing investments in the private bank and teams as well as in the parts of the commercial bank, but also the reimagining initiative. Given all of that, and given where you're running right now in terms of your expense growth, how do you think about the pace of expense growth that's reasonable as we look at 2026? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call And if you're unable to give us too much around that, is there a way we could think about the degree of positive operating leverage that's attainable as we look at it because certainly, it's a pretty wide range in terms of some of the projections out there and it could be pretty meaningful as you look at the pace of your revenue growth at this point?

Question: John Pancari - Evercore Inc - Analyst : Okay, thanks for it, sir. I appreciate that color. It's helpful. And then regarding the margin, I know you -- earlier, you cited a bit tighter commercial spreads that had impacted the margin performance and your outlook a bit here. Can you maybe elaborate a little bit where are you seeing that tightening and what areas is it? What competitors are you seeing that is driving that pressure? Is it more temporary? Or do you think there's a degree of permanence to this that's going to require a reaction out of you? Donald McCree - Citizens Financial Group Inc - Senior Vice Chairman of the Executive Board and Head of Commercial Banking No. I think what -- if you look at the broad markets at every credit index we're tightening across the board. And the good news is that, that's reflective of lots of liquidity in the marketplace, but it's putting a little bit of pressure on refinancing. And as we think about returns in terms of the customers that we're banking, we, of course, focus on return on credit allocation, but we look at overall returns on relationships and you add in what Brendan has done on the Private Bank is just another way that we can kind of interact with the clients that we're banking. So the real strategy that we've tried to build over the last 10-years has been one of broad-based financial services applications where we can make a combination of fee income and NII on the commercial side of the equation. And I think that, that's proven to be quite effective. If you look at our overall returns on our client relationships, they're going up quite a bit. So if we're giving a little bit back on spread here and there, we're making it up on fee income. And you can see that in some of the results that we've been doing. But I think it's -- I don't see that equation changing a lot over the next year or two. There's a lot of liquidity, and I think spreads are going to remain tight, and we just got to pick our spots and make sure that we generate broad returns across the relationships that we're trying to bank. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call

Question: Matt O'Connor - Deutsche Bank Securities Inc - Analyst : Good morning. This is Nate Stein on behalf of Matt O'Connor. Wanted to ask a quick follow-up on the cost base. Costs were really right in line with the guidance range this quarter despite a really solid fee print. Were there any specific flexes -- you engaged during the quarter to keep costs relatively well managed?

Question: Matt O'Connor - Deutsche Bank Securities Inc - Analyst : Thank you. And then just following up on the re-imagine the Bank program. I totally appreciate we're going to get more financial details in January, but I guess, I just wanted to ask on your confidence in the $400 million plus total run rate benefit over time?

Question: Peter Winter - DA Davidson - Analyst : Thanks. Good morning. So nice to see average loan growth turned positive this quarter. I was just wondering, could you provide some additional color on the drivers to loan growth going forward and maybe how loan demand has changed over the last 90 days?

Question: Peter Winter - DA Davidson - Analyst : Got it. That's helpful. And then just one follow-up. Just credit continues to trend favorably, but economic growth is slowing, job growth has been weakening. Are you seeing any signs of credit weakness in either the consumer or within the commercial borrowing base?

Question: Gerard Cassidy - RBC Capital Markets Wealth Management - Analyst : Good morning, Bruce.

Question: Gerard Cassidy - RBC Capital Markets Wealth Management - Analyst : Don, just a follow-up on your comments about credit. Two-part question. You answered earlier about the private credit, how you're looking at the structural degradations and there really aren't any. Are there any other points that we outsiders can look to, since private credit is growing rapidly as you all know, that we can keep an eye on to see if there is any credit potential credit deterioration coming, even though it's -- we recognize it's held up well, you guys don't have any real issues with it as well? Donald McCree - Citizens Financial Group Inc - Senior Vice Chairman of the Executive Board and Head of Commercial Banking Yeah. I would say you see a lot of the filings that all the different credit companies provide. And there's a bankruptcy here and a bankruptcy there. And what I would say in terms of the way we manage the business is we have pretty strong visibility into the underlying contours of the individual portfolios. And it seems okay broadly to us so far. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2025 / 1:00PM, CFG.N - Q3 2025 Citizens Financial Group Inc Earnings Call But I would look at the 10-Ks and the regulatory filings. And the BDC is going to be different than the private credit funds is going to be different than a PET situations fund, and you know that throughout. I mean, all of the different kind of attachment points for each of these complex is going to be quite different from an LTV standpoint and a valuation standpoint. So it's really hard to generalize. And as Bruce said before, we try to pick our counterparts very carefully. They're professional investors. A lot of them are both in the equity side and the debt side of different equations. They usually don't mix those two involvements, but they're very strong analytical kind of complexes, which we have a lot of complex confidence in, and that's the way we pick our client base. we wouldn't go in broadly and buy private credit across the board, but that's not the business we're in. So I would pay attention to the filings and the -- some of them are more complete than others, but we look at them all. So that's the only advice I'd give you, Gerard.