Restructuring Priorities: A Strategic Move Towards Direct Auto Financing

Optimizing the Balance Sheet and Relationship-based Lending

Citizens Financial Group recently made an important announcement, revealing its decision to cease originating indirect auto loans effective July 1, 2023. This strategic move is part of the group's overarching strategy to optimize its balance sheet and place greater emphasis on relationship-based lending, aligning its lending priorities with improved risk-adjusted returns.

Continuation of Existing Auto Loans

While discontinuing new indirect auto loans, Citizens will retain and continue to service the existing auto loans on its balance sheet. This ensures that current customers' financing needs will be addressed and maintained throughout the loan term.

Focus on Better Opportunities and Customer Relationships

Eric Schuppenhauer, the head of consumer lending at Citizens Financial Group, expressed that this decision enables the institution to redirect its lending efforts towards areas that offer enhanced risk-adjusted returns and greater opportunities for fostering stronger customer relationships. The move reflects the group's commitment to optimizing its lending portfolio and delivering improved service to its valued customers.

Transition Process and Performance Metrics

Starting in the third quarter of 2022, Citizens initiated a reduction in the number of active dealer relationships and began scaling back its auto loan origination volume. As of March 31, 2023, the group reported $11.5 billion in outstanding auto loans, indicating a 6.5% decrease from December 31, 2022, and a 20.1% decrease from March 31, 2022. These figures highlight the group's focused efforts in reshaping its lending landscape and aligning it with its strategic objectives.

Citizens Financial Group's decision to discontinue indirect auto loans represents a strategic shift towards optimizing its balance sheet and prioritizing relationship-based lending. While focusing on better risk-adjusted returns and deeper customer connections, Citizens will continue to serve and support existing auto loan customers. This move reflects the group's commitment to enhancing its lending portfolio and delivering exceptional service to its valued clientele.