Citizens Financial Group is planning for the best while preparing for the worst heading into a possible recession in 2023.
Throughout this year, the Providence, Rhode Island, bank has been taking steps to navigate a potential economic downturn, for example by reducing its exposure to higher-risk asset classes including commercial real estate and auto loans, according to Citizens CEO Bruce Van Saun.
At the same time, Citizens is "selectively" looking for opportunities to play "proven offense," Van Saun said during an interview Wednesday following the bank's third-quarter earnings call.
For Citizens, this largely means doubling down on consumer digital banking initiatives already in motion that seek to grow the $224.7 billion-asset regional bank into a national player.
The bank continues to expand the service offerings of Citizens Access, a cloud-enabled online banking platform that focused on retail deposits when it launched in 2018. Today it also provides a national storefront for mortgages, student loans and credit cards.
"Our vision is to migrate our core branch deposits to this modern platform over time, which will be a sea change in efficiency and flexibility," Chief Financial Officer John Woods said during a call with analysts.
Last week, Citizens announced two new programs — CitizensPlus and Citizens Private Client — which offer wealth management services to the company's retail banking customer base.
CitizensPlus offers retail customers cash rewards, lending discounts and up to $2,000 when they open a new wealth management account, while existing clients can receive financial and investment management advice through Citizens Private Client.
The new programs offer "real potential to grow relationships," Van Saun said, "so that we can go beyond the core regional footprint and push digitally into other parts of the country."
Following last year's $3.5 billion
With around 200 new locations, the New York metro area has been the bank's "most productive market," Brendan Coughlin, head of consumer banking at Citizens, said during the call with analysts.
The New York area presents an opportunity for Citizens to add retail and small-business customers "that probably have not been served to the same level we can serve them," Van Saun said during the interview.
Earlier this week, Citizens announced the hire of Rebecca O'Connell from JPMorgan Chase to serve as its market executive for the New York region.
"Our pedal is to the metal," Van Saun said in reference to the company's consumer banking growth initiatives. "Whether we end up in a recessionary environment or not, we see that there's long-term franchise growth potential."
In
The bank increased its loan-loss reserves by $123 million between July and September after adding $216 million during the second quarter and releasing $33 million during last year's third quarter.
Net interest income was $1.7 billion during the third quarter, up 45% from the same period last year, while the bank's net interest margin expanded to 3.25%. Given the Federal Reserve's ongoing interest rate hikes, Citizens executives expect NII to increase another 3% and NIM to reach 3.35% by the end of this year.
Citizens reported total revenue of $2.2 billion for the third quarter, up 31% compared with the same period last year.
As the Federal Reserve continued to raise interest rates, Citizens' deposits fell 15% from the same period last year to $178.6 billion.
The bank's net income totaled $636 million, up 20% from last year's third quarter. Earnings per share of $1.23 were in line with the average of estimates from analysts surveyed by FactSet Research Systems.
