PROVIDENCE – Citizens Financial Group Inc. is preparing for a “moderate” recession in the year ahead, company leaders said in an earnings call Jan. 17.
Chairman and CEO Bruce Van Saun told investors he is assuming an “economic slowdown” that amounts to 1% growth for the year, with inflation dropping below 3% by the fourth quarter. But Van Saun isn’t worried. The parent company for Rhode Island-based Citizens Bank is well positioned to weather the economic storm thanks to loan growth, recent acquisitions and investments in its wealth management arm, among other strategies.
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“I’m also quite optimistic,” Van Saun said. “We’ve made a lot of investments in the wealth business. And again, there, if you start to see some stability in the asset markets, we should get a kind of tailwind from that plus the investments that we’ve made. So, [we] feel confident about that.”
He also predicted that as margins expand, and interest rates stabilize, mortgage activity will tick up, while capital market fees will rebound as economic volatility stabilizes.
And while the company is keeping a “close eye” on nonperforming loans – namely in the commercial real estate sector – credit is expected to be stable, according to John Woods, Citizens’ chief financial officer.
Even so, the company added $474 million to its credit loss provisions for calendar year 2022 to shore up against potential loans, according to its year-end earnings report.
Meanwhile, the company continues to hone in on “unique opportunities,” according to Woods, to grow its presence in the New York City metro area, following the acquisitions of Investors Bancorp Inc. and East Coast branches of HSBC U.S. Bank NA, both of which closed in 2022.
“We are ready for the uncertainty of an economic slowdown in 2023 with a strong capital, liquidity and funding position,” Woods said. “We’ve taken actions to protect our net interest margin and we are being prudent with respect to our credit risk appetite and loan growth. At the same time, we are moving forward, executing against our strategy and making important investments in our business that we believe will deliver sustainable growth and outperformance over the medium term.”
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
