Citizens Financial Group, Inc. (CFG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with record high revenue, improved credit losses, and significant growth in advisory fees and capital markets. The Private Bank's expansion and strategic initiatives like 'Reimagine the Bank' and AI investments are poised to drive future growth. While management was vague on some details, the overall sentiment from the Q&A is optimistic, with positive guidance and stable financial health indicators. Given the absence of negative factors and strong growth prospects, a positive stock price reaction is expected.
Key Financial Performance
Net Interest Margin (NIM) Expanded by 7 basis points in Q4, contributing to a 20 basis point increase year-over-year. This was driven by fixed rate asset repricing and lower funding costs, partially offset by lower asset yields.
Private Bank Deposits Ended the year at $14.5 billion, reflecting strong growth. This was part of the strategic initiative to expand the Private Bank.
Private Bank Loans Reached $7.2 billion by year-end, showing solid growth driven by sponsor line utilization and growth in multifamily and residential mortgage.
Earnings Per Share (EPS) $1.13 for Q4, up 8% sequentially and 36% year-over-year. For the full year, EPS was $3.86, up 19% compared to 2024. Growth was supported by net interest income, fee growth, and credit cost improvements.
Net Interest Income (NII) Increased by 9% year-over-year, supported by a 20 basis point increase in NIM and 3% growth in spot loans.
Fees Up 8% year-over-year, driven by strong performance in Capital Markets and Wealth.
Provision for Credit Losses Down $25 million year-over-year due to reduced losses on CRE office and overall good credit performance.
Share Repurchases 3% of shares retired in 2025, contributing to an 80% return of capital to shareholders.
Operating Leverage Positive operating leverage of 1.3% sequentially and 5.2% year-over-year in Q4. For the full year, positive operating leverage was approximately 1.25%.
Expenses Up 4.6% for the full year, slightly above the 4% guide due to fee performance and investments in Private Bank and Wealth.
Wealth Business Fees Up 22% year-over-year, driven by strong advisory fees and fee-based AUM growth.
Capital Markets Fees Up 9% year-over-year, with strong performance in loan syndication and equity underwriting.
Credit Losses Net charge-offs were 43 basis points in Q4, down from 46 basis points in the prior quarter. Nonaccrual loans and criticized balances also declined.
Allowance for Credit Losses Decreased slightly to 1.53% in Q4, reflecting portfolio mix improvements and stable economic forecasts.
Tangible Book Value Per Share Increased to $38.07, up 4% sequentially and 18% year-over-year.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Private Bank Performance: The Private Bank finished the year with $14.5 billion in deposits, $10 billion in client assets, and $7.2 billion in loans. It contributed 7% to pretax income in 2025, ahead of the 5% target, and achieved a 25% ROE for the year.
Reimagine the Bank Initiative: This new program aims to deploy innovative technologies to enhance customer experience and operational efficiency. It includes 50 initiatives and is expected to deliver $450 million in pretax run rate benefits by 2028.
Corporate Banking Expansion: The company is expanding into new geographies, verticals, and sponsors, delivering positive results.
Capital Markets and Wealth Growth: Capital Markets and Wealth businesses showed strong performance, with fees up 8% year-on-year. Wealth business achieved record results, with a 22% increase in fees.
Net Interest Margin (NIM) Expansion: NIM expanded by 7 basis points in Q4 and 20 basis points year-on-year, contributing to a 9% year-on-year increase in net interest income.
Operational Efficiency: Achieved positive operating leverage of 1.3% sequentially and 5.2% year-on-year. The top 10 program delivered $100 million in run rate benefits in Q4.
Focus on Organic Growth: The company is prioritizing organic growth over acquisitions, with a strong emphasis on Private Bank and Wealth expansion.
Regulatory and Economic Outlook: The company anticipates a favorable macro environment in 2026, with GDP growth, stable unemployment, and falling inflation. It also expects a positive regulatory environment.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Regulatory Environment: Potential changes in the regulatory environment, including stablecoin regulations, could impact operations, though no significant changes are expected in 2026.
Reimagine the Bank Initiative: The initiative involves $50 million in onetime costs in 2026, with benefits of $45 million expected later in the year. This could pose financial strain if benefits are delayed or costs exceed projections.
Credit Costs and CRE Portfolio: While credit costs are expected to improve, the CRE office portfolio remains a risk, with a 10.8% allowance coverage and a total expected lifetime loss rate of about 20%.
Economic Conditions: The outlook assumes favorable GDP growth, stable unemployment, and falling inflation. Any deviation from these assumptions could negatively impact financial performance.
Capital Markets and M&A Activity: Delays in M&A and equity deals, such as those pushed into 2026 due to the government shutdown, could impact fee income and financial results.
Private Bank Expansion: Continued investment in the Private Bank and Wealth could strain expenses, especially if growth targets are not met or market conditions change.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
2026 macroeconomic environment: The macro environment for 2026 is expected to be favorable, with solid GDP growth, stable unemployment, and inflation falling by the end of the year. Two Fed rate cuts are projected, with the yield curve steepening as the 10-year treasury remains anchored around 4.25%. The regulatory environment is anticipated to remain positive.
Revenue and margin projections for 2026: Very strong revenue performance is expected, with NII growth of 10% to 12% driven by net interest margin (NIM) expansion and solid loan growth. NIM is projected to expand by 4 to 5 basis points per quarter, reaching approximately 3.25% by Q4 2026. Noninterest income is expected to grow by 6% to 8%, primarily driven by wealth and capital markets.
Loan and asset growth: Loan growth is projected at 3% to 5% for spot loans and 2.5% to 3.5% for average loans, with overall earning assets increasing by 4% to 5%.
Expense growth and operating leverage: Expenses are projected to grow by 4.5%, with full-year operating leverage exceeding 500 basis points. Investments in growth initiatives, including the Private Bank, will continue.
Capital and shareholder returns: The CET1 ratio is expected to be managed at 10.5% to 10.6% throughout 2026. Share repurchases are projected to range between $700 million and $850 million. The company is hopeful for meaningful reductions in the SCB due to Fed modeling improvements.
Private Bank growth: The Private Bank is expected to grow deposits to $18 billion to $20 billion, loans to $11 billion to $13 billion, and client assets to $16 billion to $20 billion by the end of 2026. The earnings contribution from the Private Bank is projected to increase to mid-teens in the medium term, maintaining a 20% to 25% ROE profile.
Reimagine the Bank initiative: The initiative is expected to deliver $50 million in onetime costs and $45 million in benefits in 2026, with further benefits accelerating in subsequent years. The program targets fully phased-in pretax run rate benefits of approximately $450 million by the end of 2028.
Credit costs and portfolio mix: Credit costs are expected to improve, with net charge-offs projected in the mid- to high 30s basis points. The portfolio mix will continue to improve, particularly with reductions in the CRE office portfolio.
Medium-term ROTCE target: The company remains confident in achieving its medium-term ROTCE target of 16% to 18% by the second half of 2027, supported by strategic initiatives, margin expansion, and improving credit performance.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividend Payout: Returned $1.4 billion to shareholders in 2025, including $201 million in common dividends in Q4.
Share Repurchase: Repurchased $600 million of common stock in 2025, representing about 3% of outstanding shares at the beginning of the year. Planned share repurchases of $700 million to $850 million in 2026.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How much of the benefits from the 'Reimagining the Bank' initiative will hit the bottom line versus being reinvested?
A:The program has about 50 work streams with quarter-by-quarter visibility into implementation costs and benefits. The gross benefits, excluding implementation costs, will flow through, but the exact amount reinvested depends on future investment needs and priorities. Historically, the company has had significant flow-through from top programs.
Q:What is driving the change in deposit betas from low to mid-50s to high 40s?
A:The market has become less aggressive in pricing actions, which is reflected in the high 40s deposit betas. Factors like robust noninterest-bearing balance growth, slight asset sensitivity, and disciplined hedging actions contribute to maintaining NIM levels.
Q:What are the drivers of loan growth and balance sheet optimization?
A:Loan growth is driven by the Private Bank's scaling, middle market focus, market-leading HELOC product, and reduced drag from noncore and commercial real estate rundown. Expansion markets like New York, California, and Florida are growing quickly, and the Private Bank is expected to accelerate growth as rates ease.
Q:What are the underlying assumptions for fee growth in 2026?
A:Fee growth is guided at 6%-8%, led by strong capital markets pipelines, carryover fees, and record performance in Wealth. Other areas like service charges and mortgage are not expected to see significant growth, and the guide incorporates a level of conservatism.
Q:What is the outlook for capital and buybacks in 2026?
A:The company is optimistic about a better SCB outcome, which would improve its reputation. The CET1 ratio is expected to remain on the high end of the 10%-10.5% range due to environmental uncertainties, with potential migration down within the range as conditions improve.
Q:What is the breakdown of loan categories within the Private Bank and the loan-to-deposit ratio outlook?
A:Private Bank loans are balanced across C&I private equity lending, residential and real estate lending, and other consumer loans. The loan-to-deposit ratio is expected to remain in the 60%-70% range for the next 6 quarters, with potential tightening to 80% over the medium term.
Q:What are the deposit growth assumptions and confidence levels?
A:The loan-to-deposit ratio is expected to remain stable in the high 70s. Noninterest-bearing deposit growth has been steady, particularly in the Private Bank and Consumer Bank, with modest DDA growth expected.
Q:What is the efficiency ratio outlook and key drivers?
A:The efficiency ratio is expected to improve from 62% to the mid-50s, driven by NIM expansion, Reimagine the Bank benefits, and positive operating leverage.
Q:What are the use cases and spending plans for AI?
A:AI spending has focused on foundational investments like cloud migration and data modernization. Key use cases include call center automation, technology development productivity, and analytics for fraud and credit risk. AI deployment is a significant part of the Reimagine the Bank effort.
Q:What is the growth strategy for the Private Bank and Wealth Management?
A:The Private Bank is growing through new team lift-outs, referrals, and expanding client relationships. Wealth Management is seeing strong growth in the branch-based business and Clarfeld, with market beta contributing to revenue uplift. The focus is on high-quality talent and connected business models.
Q:What is the outlook for reserves relative to CECL day 1?
A:Reserves have been reduced from 145% to about 110% of CECL day 1 levels, reflecting disciplined risk appetite and improved credit risk profile.
Q:What is the expected impact of the Private Bank on expense growth?
A:The Private Bank contributes significantly to expense growth, but this is offset by strong revenue growth, delivering positive operating leverage and supporting medium-term growth opportunities.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer on the exact flow-through of benefits from the 'Reimagining the Bank' initiative, stating it depends on future investment needs and priorities. They also did not provide a specific deposit growth guide, only indicating stability in the loan-to-deposit ratio.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aunoy
Bank Private
Bank Wealth
Bank benefit
Bank contribution
Bank deposit
Bank initiative
CRE office
Capital Markets
Citizens
Fees Capital
Fees basis
Loan
NII NIM
ROE
Slide Credit
addition
amount capital
bank aspiration
basis investment
beginning
benefit Bank
build Private
client asset
conversion
credit reserve
deposit basis
expense efficiency
geography
impact
incentive compensation
investment build
lift
line expectation
margin expansion
mid
onetime
point margin
point noninterest
rate benefit
run rate
spot loan
target
wealth capital
CFG Transcript
Citizens Financial Group, Inc. (CFG) Q4 2025 Earnings Call Transcript
Positive1-21
The earnings call highlights strong financial performance with record high revenue, improved credit losses, and significant growth in advisory fees and capital markets. The Private Bank's expansion and strategic initiatives like 'Reimagine the Bank' and AI investments are poised to drive future growth. While management was vague on some details, the overall sentiment from the Q&A is optimistic, with positive guidance and stable financial health indicators. Given the absence of negative factors and strong growth prospects, a positive stock price reaction is expected.
Citizens Financial Group, Inc. (CFG) Presents at Goldman Sachs 2025 U.S. Financial Services Conference Transcript
Neutral12-9
Citizens Financial Group, Inc. (CFG) Presents at The BancAnalysts Association of Boston Conference Transcript
Neutral11-6
Citizens Financial Group, Inc. (CFG) Q3 2025 Earnings Call Transcript
Positive10-15
The earnings call summary shows strong financial performance with growth in net interest income, noninterest income, and improved credit trends. The Private Bank's contribution to EPS and shareholder returns are positive, with ongoing strategic initiatives like 'Reimagining the Bank' promising future improvements. The Q&A section supports this sentiment, highlighting stable credit conditions and a strong capital markets pipeline. The lack of specific guidance on some initiatives is a minor concern but doesn't overshadow the overall positive outlook. The positive financial metrics and optimistic guidance suggest a likely stock price increase of 2% to 8%.
CFG Slides
CFG Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
