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Citizens Financial sees $9B pretax net loss in company-run stress test

CitizensFinancial Group Inc. on Oct. 5 disclosed the results of itscompany-run mid-cycle stress test under Dodd-Frank. The test spanned anine-quarter forecast horizon starting in the third quarter of 2016 and endingin the third quarter of 2018.

Under a hypothetical severely adverse scenario, theProvidence, R.I.-based company's risk-weighted assets at the end of the ninequarters were estimated at $122.0 billion. Pre-provision net revenue reached a cumulative$3.1 billion over the period, but still left a pretax net loss of $9.0 billion.

Citizens' lowest common equity tier 1 capital ratio over theperiod was 9.8%, compared with the required minimum of 4.5%. Its lowest tier 1ratio was 10.0%, compared with the required minimum of 6.0%. And its tier 1leverage and total capital ratios were respectively 8.8% and 12.7% at theirlowest, again above the minimum requirements of 8.0% and 4.0%.

Estimated loan losses under the scenario amounted to $4.2billion, with commercial and industrial loans accounting for the largestportion of losses at $1.3 billion.