Citizens Financial Group (NYSE:CFG) expects growth in its private bank, capital markets business and consumer franchise to help it reach a key profitability target by the end of 2027, Chief Financial Officer Aunoy Banerjee said at a company news event.
Banerjee said the bank remains confident it can achieve a 16% to 18% return on tangible common equity, or ROTCE, by the end of 2027, compared with 15.1% in the third quarter. He pointed to potential gains from net interest margin expansion, business growth and lower credit losses as Citizens works through its office loan portfolio.
Private Bank Expansion
Citizens’ private bank, launched in 2023, has grown to $18 billion in deposits, $12 billion in loans and $12.4 billion in client assets, Banerjee said. The business contributed 11% of earnings per share and generated an ROTCE above 25%, he said.
The bank has 10 full-service private banking offices and plans to open seven more next year. Over time, the network could grow to 30 offices in attractive markets, Banerjee said. He expects client assets to exceed $30 billion over the medium term.
Banerjee said Citizens intends to keep the private bank’s loan-to-deposit ratio below 70%. “We are not pursuing growth for growth’s sake,” he said, adding that the bank is focused on building a sustainable franchise with financial discipline.
Capital Markets and Branch Strategy
In commercial banking, Banerjee said Citizens has invested in sector expertise and capital markets capabilities. He cited its acquisition of digital infrastructure advisory firm DH Capital and its purchase of JMP, which added equity capabilities.
Citizens’ merger-and-acquisition pipeline is at record levels, with a substantial backlog extending into 2027, Banerjee said. He estimated that the capital markets business could generate roughly $125 million to $175 million per quarter in a constructive environment, and potentially more in a stronger market.
Asked about market volatility and fourth-quarter fee income guidance, Banerjee said deal closing dates could shift but that Citizens still felt good about the guidance provided at earnings.
In consumer banking, Citizens plans to close roughly 100 to 120 remaining in-store branches and use the savings to establish 50 to 60 traditional branches. The effort, called Network Evolution and Experience Transformation, or NEXT, also includes branch relocations and new branches within its existing footprint, particularly in the New York metropolitan area.
Banerjee said the bank expects its total branch count to remain unchanged through 2035. Savings from in-store closures are expected to offset the expense of the new traditional branches, he said.
Technology, Credit and Capital
Citizens is also using technology, including artificial intelligence, to change how it operates under its Reimagine the Bank program. Banerjee said approximately 500 people are involved in the effort, which includes work on customer complaints, commercial credit processes and application simplification.
The bank expects to exit the current year with a $100 million savings run rate and 2028 with a $450 million run rate, he said. About two-thirds of the 2028 savings are expected to be in expenses.
On credit quality, Banerjee said Citizens sees no meaningful broad-based stress in its commercial and industrial loan book. The bank continues to work through its office portfolio, with a few more quarters likely before that process is complete, he said.
Direct data center exposure was approximately $1.5 billion, or roughly 1% of loans, as of the last quarter, Banerjee said. He described the bank’s indirect exposure to related sectors as relatively modest.
Citizens expects to continue returning capital through dividends and share repurchases while maintaining capacity to invest and support clients, Banerjee said. The timing and pace of buybacks will depend on factors including capital levels, interest rates and the share price, he said.
Banerjee described the economic backdrop as constructive but uncertain. He projected GDP growth of at least 2%, and possibly closer to 2.5%, over the next four or five quarters, and said the bank expects a few additional interest rate increases.
About Citizens Financial Group (NYSE:CFG)
Citizens Financial Group, Inc is a bank holding company headquartered in Providence, Rhode Island. Its principal subsidiary, Citizens Bank, provides banking and financial services to consumers, small businesses, middle-market companies, large corporations and institutional clients.
The company offers consumer deposit accounts, residential mortgages, home equity financing, credit cards, personal loans and other lending products. Its commercial banking activities include business loans, equipment financing, treasury management, capital markets services and investment banking.
