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Citizens Financial Group projects $8.3B loss in company-run stress test

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Citizens Financial Group projects $8.3B loss in company-run stress test

Citizens Financial Group Inc. estimates it would record a cumulative net pretax loss of $8.3 billion after nine quarters of a hypothetical severely adverse scenario.

The projection is the result of the Providence, R.I.-based company's mid-cycle stress test, required under Dodd-Frank and covering the period from July 1, 2017, through Sept. 30, 2019.

Citizens also expects to record $3.8 billion in pre-provision net revenue, $6.9 billion in losses and $5.2 billion in provisions. Its loan losses would total $4.2 billion, with commercial and industrial comprising $1.4 billion. For the C&I book, that would be a portfolio loss rate of 4.4%. Meanwhile, credit card losses would reach approximately $200 million — a 16.5% portfolio loss rate. Domestic commercial real estate loan losses would amount to $800 million, or a 5.6% loss rate.

The company's common equity Tier 1 capital ratio is expected to end the scenario at 10.4% and dip no lower than 10.0%, well above the required 4.5% minimum. Its Tier 1 risk-based capital ratio, total risk-based capital ratio and Tier 1 leverage ratio would hit low points of 10.2%, 12.9% and 8.8%, respectively — also exceeding their respective minimum requirements.