Citizens Financial Group (CFG) to Raise Dividend to $0.27 and Buyback Up to $1.02B
Citizens Financial Group, Inc. (NYSE: CFG) today announced that the Board of Governors of the Federal Reserve System (the “Federal Reserve”) has completed its review of the Company’s 2018 Capital Plan (the “Plan”) in connection with its Comprehensive Capital Analysis and Review (“CCAR”) of the nation’s 17 large and noncomplex bank holding companies not subject to qualitative review and has not objected to the Plan. The CCAR results follow the Federal Reserve’s June 21, 2018 publication of its Dodd-Frank Act Stress Test results.
“We are pleased to report another successful CCAR submission which reflects our strong capital position and the improvements we’ve made to our balance sheet, business model and earnings power,” said Bruce Van Saun, Chairman and Chief Executive Officer. “Our 2018 Capital Plan provides the ability to increase our dividend per common share by 23% next quarter and increase our total common share repurchases by 20% compared with our prior year’s Capital Plan. While we do not believe the Federal Reserve’s PPNR model in the stress test is delivering accurate results for Citizens, nonetheless our expected glide path to reduce our common equity tier one capital ratio remains on track and we remain confident in our ability to continue to drive improving financial performance and attractive returns to shareholders.”
The Plan, which is designed to support organic growth, provide strong return of capital to the Company’s shareholders and optimize CFG’s capital structure, includes the following capital actions for the four-quarter period beginning
July 1, 2018:
- Proposed quarterly dividends of $0.27 per common share beginning in third quarter 2018, which represents a 23% increase from second quarter 2018, with the potential to raise quarterly common dividends to $0.32 per common share beginning in 2019.
- Common share repurchases of up to $1.02 billion, an increase of 20% versus CFG’s 2017 Capital Plan.
The following table compares the capital return to common shareholders during CFG’s 2018 Capital Plan window with the 2017 Capital Plan window.
| $ millions | 3Q17 | 4Q17 | 1Q18 | Consensusestimate2Q18(1) | 2017 CapitalPlanwindow(1) | 2018 CapitalPlanwindow(1) | |||||||||||||||||||||||||||
| Common dividends | $ | 90 | $ | 89 | $ | 108 | $ | 107 | $ | 394 | $ | 553 | |||||||||||||||||||||
| Common share repurchases | 225 | 335 | 175 | 147 | 882 | 1,020 | |||||||||||||||||||||||||||
| Total capital return to common shareholders | $ | 315 | $ | 424 | $ | 283 | $ | 254 | $ | 1,276 | $ | 1,573 | |||||||||||||||||||||
| Net income available to common shareholders(1) | $ | 341 | $ | 666 | $ | 381 | $ | 413 | $ | 1,801 | $ | 1,695 | |||||||||||||||||||||
| Underlying net income available to common shareholders(1)(2) | $ | 341 | $ | 349 | $ | 381 | $ | 413 | $ | 1,484 | $ | 1,695 | |||||||||||||||||||||
| Dividend payout ratio | 26 | % | 13 | % | 28 | % | 26 | % | 22 | % | 33 | % | |||||||||||||||||||||
| Underlying dividend payout ratio(1)(2) | 26 | % | 25 | % | 28 | % | 26 | % | 27 | % | 33 | % | |||||||||||||||||||||
| Total payout ratio(1) | 71 | % | 93 | % | |||||||||||||||||||||||||||||
| Underlying total payout ratio(1)(2) | 86 | % | 93 | % | |||||||||||||||||||||||||||||
| Year-over-year increase in total payout | 23 | % | |||||||||||||||||||||||||||||||
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| (1) 2017 and 2018 Capital Plan windows reflect Bloomberg consensus net income estimates for 2Q18-2Q19 as of June 27, 2018; Estimated common dividends reflect Bloomberg-consensus implied diluted common shares and proposed quarterly dividend per common share of $0.27 for 3Q18 and 4Q18 and $0.32 for 1Q19 and 2Q19. The original 2017 Capital Plan included common stock repurchases of $850 million. |
| (2) 4Q17 after-tax notable items excluded from our “Underlying” results reflect a $10 million gain on a TDR portfolio sale offset by $11 million of other notable items (“TDR Transaction II”) and a $331 million benefit relating to the December 2017 Tax Legislation, partially offset by $13 million of other notable items. |
Proposed dividends are subject to consideration and approval by CFG’s Board of Directors. Common share repurchases under the Plan have been authorized by CFG’s Board of Directors. CFG’S common share repurchases may be executed in the open market or in privately negotiated transactions, including under Rule 10b5-1 plans. The timing and exact amount of common dividends and common share repurchases in accordance with the Plan will be subject to various factors, including the Company’s capital position, financial performance and market conditions.
The Federal Reserve’s public disclosure of 2018 CCAR results for all participating bank holding companies is available on the Federal Reserve’s website.