CITIZENS FINANCIAL GROUP INC/RI MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

Page

       Forward-Looking Statements                                              6
       Introduction                                                            7
       Financial Performance                                                  8
       Results of Operations                                                  10
       Net Interest Income                                                    10
       Noninterest Income                                                     11
       Noninterest Expense                                                    12
       Provision for Credit Losses                                            12
       Income Tax Expense                                                     12
       Business Operating Segments                                            12
       Analysis of Financial Condition                                        14
       Securities                                                             14
       Loans and Leases                                                       15
       Allowance for Credit Losses and Nonaccrual Loans and Leases            15
       Deposits                                                               20
       Borrowed Funds                                                         20
       Capital and Regulatory Matters                                         20
       Liquidity                                                              23
       Critical Accounting Estimates                                          26
       A    cco    unting and Reporting Developments                          28
       Risk Governance                                                        28
       Market Risk                                                            29
       Non-GAAP Financial Measures and Reconciliations                        33



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FORWARD-LOOKING STATEMENTS


This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements regarding potential
future share repurchases and future dividends as well as the potential effects
of the COVID-19 disruption and Russia's invasion of Ukraine on our business,
operations, financial performance and prospects, are forward-looking statements.
Also, any statement that does not describe historical or current facts is a
forward-looking statement. These statements often include the words "believes,"
"expects," "anticipates," "estimates," "intends," "plans," "goals," "targets,"
"initiatives," "potentially," "probably," "projects," "outlook," "guidance" or
similar expressions or future conditional verbs such as "may," "will," "should,"
"would," and "could."

Forward-looking statements are based upon the current beliefs and expectations
of management, and on information currently available to management. Our
statements speak as of the date hereof, and we do not assume any obligation to
update these statements or to update the reasons why actual results could differ
from those contained in such statements in light of new information or future
events. We caution you, therefore, against relying on any of these
forward-looking statements. They are neither statements of historical fact nor
guarantees or assurances of future performance. While there is no assurance that
any list of risks and uncertainties or risk factors is complete, important
factors that could cause actual results to differ materially from those in the
forward-looking statements include the following, without limitation:

•Negative economic and political conditions that adversely affect the general
economy, housing prices, the job market, consumer confidence and spending habits
which may affect, among other things, the level of nonaccrual assets,
charge-offs and provision expense;

•The rate of economic growth and employment levels, as well as general business and economic conditions and changes in the competitive environment;


•Our ability to implement our business strategy, including the cost savings and
efficiency components, and achieve our financial performance goals, including
through the integration of Investors and the HSBC branches;

•The disruption of COVID-19 and its effects on the economic and business environments in which we operate;


•The impact of Russia's invasion of Ukraine and the imposition of sanctions on
Russia and other actions in response, including on economic and market
conditions, inflationary pressures and the interest rate environment, commodity
price and foreign exchange rate volatility, and heightened cybersecurity risks;

•Our ability to meet increased supervisory requirements and expectations;

• Liabilities and business restrictions resulting from litigation and regulatory investigations;

•Our capital and liquidity requirements in accordance with regulatory capital standards and our ability to generate capital internally or raise capital on favorable terms;

•The effect of changes in interest rates on our net interest income, net interest margin and originations of mortgages, mortgage servicing rights and mortgages held for sale;


•Changes in interest rates and market liquidity, as well as the magnitude of
such changes, which may reduce interest margins, impact funding sources and
affect the ability to originate and distribute financial products in the primary
and secondary markets;

• The effect of changes in the level of deposits in checking or savings accounts on our funding costs and our net interest margin;

• Financial services reform and other current, pending or future legislation or regulations that could adversely affect our revenues and business;

•A failure or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyberattacks;

• Higher than expected costs or other difficulties in integrating our business with that of the Investors and relevant HSBC branches;

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• The inability to retain existing investors or HSBC customers and employees following the closing of the Investors acquisition and the HSBC transaction; and

•Management’s ability to identify and manage these and other risks.


In addition to the above factors, we also caution that the actual amounts and
timing of any future common stock dividends or share repurchases will be subject
to various factors, including our capital position, financial performance,
risk-weighted assets, capital impacts of strategic initiatives, market
conditions and regulatory and accounting considerations, as well as any other
factors that our Board of Directors deems relevant in making such a
determination. Therefore, there can be no assurance that we will repurchase
shares from or pay any dividends to holders of our common stock, or as to the
amount of any such repurchases or dividends. Further, statements about the
effects of the COVID-19 disruption and Russia's invasion of Ukraine on our
business, operations, financial performance and prospects may constitute
forward-looking statements and are subject to the risk that the actual impacts
may differ, possibly materially, from what is reflected in those forward-looking
statements due to factors and future developments that are uncertain,
unpredictable and in many cases beyond our control, including the scope and
duration of the pandemic and Russia's invasion of Ukraine, actions taken by
governmental authorities in response to the pandemic and Russia's invasion of
Ukraine, and the direct and indirect impact of the pandemic and Russia's
invasion of Ukraine on our customers, third parties and us.

More information about factors that could cause actual results to differ
materially from those described in the forward-looking statements can be found
in the "Risk Factors" section in Part II, Item 1A of this report and Part I,
Item 1A of our 2021 Form 10-K.

INTRODUCTION


Citizens Financial Group, Inc. is one of the nation's oldest and largest
financial institutions with $192.1 billion in assets as of March 31, 2022.
Headquartered in Providence, Rhode Island, we offer a broad range of retail and
commercial banking products and services to individuals, small businesses,
middle-market companies, large corporations and institutions. We help our
customers reach their potential by listening to them and by understanding their
needs in order to offer tailored advice, ideas and solutions. In Consumer
Banking, we provide an integrated experience that includes mobile and online
banking, a full-service customer contact center and, including the acquisition
of Investors, the convenience of approximately 3,300 ATMs and more than 1,200
branches in 14 states and the District of Columbia. Consumer Banking products
and services include a full range of banking, lending, savings, wealth
management and small business offerings. In Commercial Banking, we offer a broad
complement of financial products and solutions, including lending and leasing,
deposit and treasury management services, foreign exchange, interest rate and
commodity risk management solutions, as well as loan syndication, corporate
finance, merger and acquisition, and debt and equity capital markets
capabilities. More information is available at www.citizensbank.com.

On February 18, 2022, CBNA completed the acquisition of HSBC East Coast branches
and national online deposit business. The transaction extends our physical
presence and adds customers in several attractive markets, accelerating our
national expansion strategy. The transaction includes 66 locations in the New
York City metropolitan area, 9 locations in the Mid-Atlantic/Washington D.C.
area, and 5 locations in Southeast Florida.

On April 6, 2022, Citizens completed the acquisition of all outstanding shares
of Investors for a combination of stock and cash. The acquisition enhances
Citizens' banking franchise, adding an attractive middle market, small business
and consumer customer base while building our physical presence in the
Mid-Atlantic region with the addition of 154 branches located in the greater New
York City and Philadelphia metropolitan areas and across New Jersey.

For more information on these acquisitions, see Note 2.


The following MD&A is intended to assist readers in their analysis of the
accompanying unaudited interim Consolidated Financial Statements and
supplemental financial information. It should be read in conjunction with the
unaudited interim Consolidated Financial Statements and Notes to the unaudited
interim Consolidated Financial Statements in Part I, Item 1, as well as other
information contained in this document and our 2021 Form 10-K.

Non-GAAP Financial Measures


This document contains non-GAAP financial measures denoted as "Underlying"
results. Underlying results for any given reporting period exclude certain items
that may occur in that period which management does not consider indicative of
our on-going financial performance. We believe these non-GAAP financial measures
provide

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useful information to investors because they are used by management to evaluate
our operating performance and make day-to-day operating decisions. In addition,
we believe our Underlying results in any given reporting period reflect our
on-going financial performance, increase comparability of period-to-period
results, and are useful to consider in addition to our GAAP financial results.

Other companies may use similarly titled non-GAAP financial measures that are
calculated differently from the way we calculate such measures. Accordingly, our
non-GAAP financial measures may not be comparable to similar measures used by
such companies. We caution investors not to place undue reliance on such
non-GAAP financial measures, but to consider them with the most directly
comparable GAAP measures. Non-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation or as a substitute
for our results reported under GAAP.

Non-GAAP measures are denoted throughout our MD&A by the use of the term
Underlying. Where there is a reference to these metrics in that paragraph, all
measures that follow are on the same basis when applicable. For more information
on the computation of non-GAAP financial measures, see "-Non-GAAP Financial
Measures and Reconciliations."

FINANCIAL PERFORMANCE

Quarter to date and end of period – Highlights


Net income of $420 million decreased $191 million from the first quarter of
2021, with earnings per diluted common share of $0.93, down $0.44 from $1.37 per
diluted common share in the first quarter of 2021. ROTCE of 11.4% decreased from
17.2% in the first quarter of 2021.

In the first quarter of 2022, results reflect $56 million of expenses, net of
tax benefit, or $0.14 per diluted common share, from notable items compared to
$15 million of expenses, net of tax benefit, or $0.04 per diluted common share,
from notable items in the first quarter of 2021.

Table 1: Notable elements

                                                                                     Three Months Ended March 31, 2022
                                                                                               Less: notable items
                                                                               Integration                                             Underlying results
(in millions)                                     Reported results (GAAP)   

costs(1) TOP and other(2) Provision(3) (non-GAAP) Provision (profit) for credit losses

                          $3                       $-              $-                  $24                 ($21)
Noninterest expense                                         1,106                       37              11                    -                1,058
Income tax expense                                            116                      (10)              -                   (6)                 132


                                                                                     Three Months Ended March 31, 2021
                                                                                               Less: notable items
                                                                                                                                        Underlying results
(in millions)                                     Reported results (GAAP)   

TOP integration costs and others(2) Provision (non-GAAP) Provision (profit) for credit losses

                       ($140)                    $-                   $-                  $-               ($140)
Noninterest expense                                         1,018                      -                   20                   -                 998
Income tax expense                                            170                      -                   (5)                  -                 175


(1) Includes integration costs associated with acquisitions.
(2) Includes our TOP transformational and revenue and efficiency initiatives for
the three months ended March 31, 2022 and 2021, and income tax impacts related
to legacy tax matters for the three months ended March 31, 2022.
(3) Includes the initial provision for credit losses of $24 million tied to the
HSBC transaction. As required by purchase accounting, a fair value mark for
performing loans including both credit and interest rate components is recorded
in addition to the provision for credit losses expense, thus the credit exposure
has been "double counted".

• Net profit available to ordinary shareholders of $396 million decreases $192 millioncompared to $588 million in the first quarter of 2021.

• On an underlying basis, which excludes notable items, net income available to common shareholders of $452 million compared to $603 million in the first quarter of 2021.

• On an underlying basis, diluted earnings per ordinary share of $1.07 compared to
$1.41 in the first quarter of 2021.


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• Total turnover of $1.6 billion decreases $14 millionor 1%, compared to the first quarter of 2021, due to an 8% decline in non-interest income, partially offset by a 3% increase in net interest income.

• Net interest income of $1.1 billion increased by 3%, reflecting 3% growth in interest-earning assets and an overall stable net interest margin.

• The net interest margin of 2.75% is stable compared to the first quarter of 2021.

– Net interest margin on an ETP basis of 2.75% decreased by 1 basis point, compared to 2.76% in the first quarter of 2021, as the impact of lower yields on earning assets was largely offset by the deployment of cash in loan growth.


-Average loans and leases of $129.2 billion increased $6.3 billion, or 5%, from
$122.8 billion in the first quarter of 2021, driven by a $6.6 billion increase
in retail loans given growth in mortgage, auto and education, and the impact of
the HSBC transaction, partially offset by planned run-off of personal unsecured
installment loans and a $304 million decrease in commercial as growth was more
than offset by a reduction in PPP loans.

-Average deposits of $155.1 billion increased $8.4 billion, or 6%, from $146.6
billion in the first quarter of 2021, driven by the impact of the HSBC
transaction and growth in demand, checking with interest and savings, partially
offset by a decrease in money market and term.

• Non-interest income of $498 million decreases $44 millionor 8%, compared to the first quarter of 2021, primarily reflecting lower mortgage banking fees partially offset by improved capital markets fees, foreign exchange and derivatives income, and other income.

• Non-interest expenses of $1.1 billion increased by 9% compared to the first quarter of 2021.


•On an Underlying basis, noninterest expense increased 6% from the first quarter
of 2021, reflecting higher salaries and employee benefits given merit increases,
and other operating expense associated with increased travel and advertising
costs, partially offset by the benefit of efficiency initiatives.

•The efficiency coefficient of 67.2% compared to 61.4% for the first quarter of 2021, and the ROTCE of 11.4% compared to 17.2%.

• On an underlying basis, the efficiency ratio of 64.3% compared to 60.2% for the first quarter of 2021, and the ROTCE of 13.0% compared to 17.6%.


•Credit provision expense of $3 million compares with a $140 million credit
provision benefit for the first quarter of 2021, reflecting strong credit
performance across the retail and commercial loan portfolios. The first quarter
2022 Underlying credit provision benefit excludes the "double count" of the $24
million day-one CECL provision expense tied to the HSBC transaction.

•Tangible book value per common share of $30.97 decreased 6% from the first
quarter of 2021.


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RESULTS OF OPERATIONS

Net interest income


Net interest income is our largest source of revenue and is the difference
between the interest earned on interest-earning assets (generally loans, leases
and investment securities) and the interest expense incurred in connection with
interest-bearing liabilities (generally deposits and borrowed funds). The level
of net interest income is primarily a function of the difference between the
effective yield on our average interest-earning assets and the effective cost of
our interest-bearing liabilities. These factors are influenced by the pricing
and mix of interest-earning assets and interest-bearing liabilities which, in
turn, are impacted by external factors such as local economic conditions,
competition for loans and deposits, the monetary policy of the FRB and market
interest rates. For further discussion, refer to "-Market Risk - Non-Trading
Risk," and "-Risk Governance" as described in our 2021 Form 10-K.

Table 2: Main components of net interest income

                                                                                        Three Months Ended March 31,
                                                                         2022                                                  2021                                        Change
                                                         Average         Income/        Yields/                Average         Income/        Yields/             Average         Yields/
(dollars in millions)                                   Balances         Expense         Rates                Balances         Expense         Rates              Balances      Rates (bps)

Assets:

Interest-bearing cash and due from banks and
deposits in banks                                           $8,055           $4             0.21  %              $10,861           $3            0.11  %         ($2,806)          10 bps
Taxable investment securities                               29,245          138             1.88                  27,031          128            1.89              2,214                   (1)
Non-taxable investment securities                                2            -             2.60                       3            -            2.60                 (1)                    -
Total investment securities                                 29,247          138             1.88                  27,034          128            1.89              2,213                   (1)
Commercial and industrial                                   44,947          328             2.91                  44,287          347            3.12                660                  (21)
Commercial real estate                                      14,066           90             2.57                  14,675           94            2.57               (609)                    -
Leases                                                       1,560           11             2.81                   1,915           13            2.69               (355)                   12
Total commercial loans and leases                           60,573          429             2.83                  60,877          454            2.98               (304)                 (15)
Residential mortgages                                       23,461          169             2.88                  19,388          148            3.05              4,073                  (17)
Home equity                                                 12,124           90             3.02                  12,001           95            3.20                123                  (18)
Automobile                                                  14,534          127             3.55                  12,229          125            4.14              2,305                  (59)
Education                                                   13,034          131             4.07                  12,436          134            4.38                598                  (31)
Other retail                                                 5,428          102             7.63                   5,916          105            7.25               (488)                   38
Total retail loans                                          68,581          619             3.65                  61,970          607            3.96              6,611                  (31)
Total loans and leases                                     129,154        1,048             3.26                 122,847        1,061            3.47              6,307                  (21)
Loans held for sale, at fair value                           2,366           16             2.70                   3,254           18            2.27               (888)                   43
Other loans held for sale                                      454            7             5.89                     385            6            6.30                 69                  (41)
Interest-earning assets                                    169,276        1,213             2.88                 164,381        1,216            2.97              4,895                   (9)
Noninterest-earning assets                                  19,041                                                18,188                                             853
Total assets                                              $188,317                                              $182,569                                          $5,748
Liabilities and Stockholders' Equity:
Checking with interest                                     $30,417           $5             0.07  %              $26,116           $6            0.09  %          $4,301            (2)
Money market                                                47,220           12             0.10                  49,536           22            0.18             (2,316)           (8)
Savings                                                     23,835            5             0.08                  18,611            5            0.11              5,224            (3)
Term                                                         4,970            3             0.29                   8,572           17            0.83             (3,602)           (54)
Total interest-bearing deposits                            106,442           25             0.10                 102,835           50            0.20              3,607            (10)
Short-term borrowed funds                                       29            -             3.50                     150            -            0.46               (121)           304
Long-term borrowed funds                                     6,066           41             2.66                   8,336           49            2.35             (2,270)            31
Total borrowed funds                                         6,095           41             2.66                   8,486           49            2.32             (2,391)            34
Total interest-bearing liabilities                         112,537           66             0.23                 111,321           99            0.36              1,216            (13)
Demand deposits                                             48,641                                                43,814                                           4,827
Other liabilities                                            4,144                                                 4,858                                            (714)
Total liabilities                                          165,322                                               159,993                                           5,329
Stockholders' equity                                        22,995                                                22,576                                             419
Total liabilities and stockholders' equity                $188,317                                              $182,569                                          $5,748
Interest rate spread                                                                        2.65  %                                              2.62  %                             3
Net interest income and net interest margin                              $1,147             2.75  %                            $1,117            2.75  %                             -
Net interest income and net interest margin, FTE(1)                      $1,149             2.75  %                            $1,120            2.76  %                            (1)

Reminder: Total deposits (interest bearing and demand) $155,083 $25

             0.07  %             $146,649          $50            0.14  

% $8,434 (7) basis points

(1) Net interest income and net interest margin are presented on an FTE basis using the federal statutory tax rate of 21%. The ETP impact is mainly attributable to commercial and industrial loans for the periods presented.

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Net interest income of $1.1 billion increased 3% from the first quarter of 2021,
reflecting 3% growth in interest-earning assets and broadly stable net interest
margin.

Net interest margin on a FTE basis of 2.75% decreased 1 basis point compared to
2.76% in the first quarter of 2021, as the impact of lower earning asset yields
was largely offset by the deployment of cash into loan growth. Average
interest-earning asset yields of 2.88% decreased 9 basis points from 2.97% in
the first quarter of 2021, while average interest-bearing liability costs of
0.23% decreased 13 basis points from 0.36% in the first quarter of 2021.

Average interest-earning assets of $169.3 billion increased $4.9 billion, or 3%,
from the first quarter of 2021, as a $2.2 billion, or 8% increase in investments
and a $6.3 billion, or 5%, increase in loans and leases was partially offset by
a $2.8 billion decrease in cash held in interest-bearing deposits reflecting
partial deployment of elevated liquidity. Loan growth was driven by a $6.6
billion increase in retail loans given growth in mortgage, auto and education,
partially offset by planned runoff of personal unsecured installment loans.
Commercial loans decreased $304 million as growth was more than offset by a $4.2
billion reduction in PPP loans.

Average deposits of $155.1 billion increased $8.4 billion, or 6%, from the first
quarter of 2021, reflecting growth in lower cost deposits and the $2.9 billion
impact of the HSBC transaction, partially offset by decreases in money market
and term. Average total borrowed funds of $6.1 billion decreased $2.4 billion
from the first quarter of 2021, given the pay down of senior debt. Total
borrowed funds costs of $41 million decreased $8 million from the first quarter
of 2021. The total borrowed funds cost of 2.66% increased 34 basis points from
2.32% in the first quarter of 2021.

Non-interest income

Table 3: Non-interest income

                                                                               Three Months Ended March 31,
(in millions)                                                                                             2022              2021            Change            Percent
Capital markets fees                                                                                        $93              $81             $12                  15  %
Service charges and fees                                                                                     98               99              (1)                 (1)
Mortgage banking fees                                                                                        69              165             (96)                (58)
Card fees                                                                                                    60               55               5                   9
Trust and investment services fees                                                                           61               58               3                   5
Letter of credit and loan fees                                                                               38               38               -                   -
Foreign exchange and derivative products                                                                     51               28              23                  82
Securities gains, net                                                                                         4                3               1                  33
Other income(1)                                                                                              24               15               9                  60
Noninterest income                                                                                         $498             $542            ($44)                 (8  %)

(1) Includes life insurance income held by the bank and other income for all periods presented.


Noninterest income decreased $44 million, or 8%, from the first quarter of 2021,
primarily reflecting lower mortgage banking fees partially offset by improved
capital markets fees, foreign exchange and derivative products revenue, and
other income.

•Lower mortgage banking fees are due to lower sales margins and lower production volumes.


•Companies we acquired in the second half of 2021 contributed $21 million of
capital market fees in the first quarter of 2022. Excluding these acquisitions,
capital markets fees reflect lower merger and acquisition advisory and
underwriting fees, partially offset by higher loan syndication fees.

•Record increase in foreign exchange and derivative products reflecting growth in interest rate and commodity hedging activities.

•The increase in other income mainly reflects the increase in investment income.


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Non-interest expenses

Table 4: Non-interest expenses

                                                                                 Three Months Ended March 31,
(in millions)                                                                                               2022                2021            Change  

Percent

Salaries and employee benefits                                                                                $594               $548            $46                   8  %
Equipment and software                                                                                         150                152             (2)                 (1)
Outside services                                                                                               169                139             30                  22
Occupancy                                                                                                       83                 88             (5)                 (6)
Other operating expense                                                                                        110                 91             19                  21
Noninterest expense                                                                                         $1,106             $1,018            $88                   9  %


Noninterest expense increased $88 million, or 9%, compared to the first quarter
of 2021. On an Underlying basis, noninterest expense of $1.1 billion increased
$60 million, or 6%, reflecting higher salaries and employee benefits given merit
increases, and other operating expense associated with increased travel and
advertising costs, partially offset by the benefit of efficiency initiatives.

Provision for credit losses


The provision for credit losses is the result of a detailed analysis performed
to estimate our ACL. The total provision for credit losses includes the
provision for loan and lease losses and the provision for unfunded commitments.
Refer to "-Analysis of Financial Condition - Allowance for Credit Losses and
Nonaccrual Loans and Leases" for more information.

Credit provision expense was $3 million for the first quarter of 2022, compared
to a credit provision benefit of $140 million in the first quarter of 2021,
reflecting strong economic growth that began in the fourth quarter of 2020 and
continued solid credit performance. Underlying credit provision benefit of $21
million in the first quarter of 2022 excludes the "double count" of the $24
million day-one CECL provision expense tied to the HSBC transaction.

income tax expense


Income tax expense of $116 million for the first quarter of 2022 decreased $54
million from $170 million in the first quarter of 2021 due to decreased taxable
income. The effective income tax rate decreased to 21.7% in the first quarter of
2022 from 21.8% in the first quarter of 2021, primarily driven by the increased
benefit of tax-advantaged investments on lower pre-tax income.

Operating sectors


We have two business operating segments: Consumer Banking and Commercial
Banking. Segment results are derived by specifically attributing managed assets,
liabilities, capital and related revenues, provision for credit losses, which at
the segment level is equal to net charge-offs, and other expenses. The residual
difference between the consolidated provision for credit losses and the business
operating segments' net charge-offs is reflected in Other.

Non-segment operations are classified as Other and include assets, liabilities,
capital, revenues, provision for credit losses, expenses and income tax expense
not attributed to our Consumer or Commercial Banking segments as well as
treasury and community development. In addition, for impairment testing
purposes, we allocate all goodwill to our Consumer Banking and Commercial
Banking reporting units.

There have been no significant changes in our methodologies used to allocate
items to our business operating segments as described in "-Results of Operations
- Business Operating Segments" in our 2021 Form 10-K other than the change
relative to our FTP methodology. See Note 17 for additional information.

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The following table presents certain financial data of our business operating
segments. Total business operating segment financial results differ from total
consolidated financial results. These differences are reflected in Other
non-segment operations. See Note 17 for additional information.

Table 5: Selected Financial Data for Lines of Business

                                                                    Consumer Banking                                                  Commercial Banking
                                                              Three Months Ended March 31,                                       Three Months Ended March 31,
(dollars in millions)                                   2022                                 2021                                2022                      2021
Net interest income                                        $857                                 $863                                $416                      $421
Noninterest income                                          257                                  351                                 213                       170
Total revenue                                             1,114                                1,214                                 629                       591
Noninterest expense                                         784                                  750                                 272                       227
Profit before credit losses                                 330                                  464                                 357                       364
Net charge-offs                                              49                                   59                                  12                       101
Income before income tax expense                            281                                  405                                 345                       263
Income tax expense                                           72                                  103                                  74                        52
Net income                                                 $209                                 $302                                $271                      $211
Average Balances:
Total assets                                            $77,551                              $75,283                             $61,118                   $57,738
Total loans and leases(1)                                73,233                               70,188                              58,007                    54,813
Deposits                                                104,663                               97,180                              44,520                    43,974
Interest-earning assets                                  74,052                               71,135                              58,312                    55,175


(1) Includes LHFS.

Consumer Banking

Net interest income of $857 million decreased $6 million, or 1%, from the first
quarter of 2021, driven by a reduced benefit from PPP loan forgiveness,
partially offset by loan growth, including the impacts from the HSBC
transaction. Average loans increased $3.0 billion driven by higher residential
mortgages, including approximately $480 million from the HSBC transaction,
automobile and education, partially offset by the impact of the reduction in PPP
loans and planned runoff of personal unsecured installment loans. Deposits
increased $7.5 billion, or 8%, including the $2.9 billion impact of the HSBC
transaction. Growth in demand, checking with interest and savings were partially
offset by decreases in money market and term.

Noninterest income decreased $94 million, or 27%, from the first quarter of
2021, driven by lower mortgage banking fees reflecting lower gain-on-sale
margins and production volumes. This decrease was partially offset by higher
trust and investment services fees driven by an increase in assets under
management from strong net inflows and higher equity market levels, and higher
card fees driven by higher debit and credit card volumes.

Non-interest expenses increased $34 millionor 5%, compared to the first quarter of 2021, reflecting higher salaries and benefits given merit increases, as well as higher other operating expenses associated with higher travel and advertising costs , partially offset by the benefits of efficiency initiatives.

Net imputations of $49 million decreases $10 millionor 17% as consumers continue to benefit from fiscal support provided during the pandemic, rapid job growth, and high values ​​of residential mortgage collateral and auto loans.

The Commercial Bank

Net interest income of $416 million decreases $5 millioni.e. 1%, from $421 million in the first quarter of 2021, due to lower returns on earning assets, partially offset by improved funding mix and deposit pricing.

Non-interest income of $213 million increased $43 millioni.e. 25%, from $170 million in the first quarter of 2021, driven by record foreign exchange and derivatives revenues reflecting an increase in client interest rate and commodity hedging activities and fee-driven capital markets fees higher loan syndication fees, partially offset by lower M&A advisory and underwriting fees.


Noninterest expense of $272 million increased $45 million, or 20%, from $227
million in the first quarter of 2021, reflecting higher salaries and employee
benefits given merit increases, as well as higher other operating expense
associated with increased travel and advertising costs, partially offset by the
benefit of efficiency initiatives.

                                             Citizens Financial Group, Inc. | 13
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Net imputations of $12 million decreases $89 millionor 88%, compared to the first quarter of 2021 given the strong economic growth that began in the fourth quarter of 2020 and continued strong credit performance.

ANALYSIS OF THE FINANCIAL SITUATION

Securities

Table 6: Amortized cost and fair value of AFS and HTM titles

                                                                        March 31, 2022                               December 31, 2021
                                                               Amortized                                      Amortized
(in millions)                                                    Cost                  Fair Value               Cost                 Fair Value
U.S. Treasury and other                                               $158                $154                    $11                     $11
State and political subdivisions                                         2                   2                      2                       2
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities             25,074              23,498                 24,607                  24,442
Other/non-agency                                                       412                 401                    397                     405
Total mortgage-backed securities                                    25,486              23,899                 25,004                  24,847

Collateralized loan obligations                                      1,276               1,264                  1,208                   1,207

Total available-for-sale debt securities, at fair value $26,922

            $25,319                $26,225                 $26,067
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities             $1,370              $1,355                 $1,505                  $1,557

Total mortgage-backed securities                                     1,370               1,355                  1,505                   1,557
Asset-backed securities                                                686                 656                    737                     732
  Total debt securities held to maturity                            $2,056              $2,011                 $2,242                  $2,289

Total available-for-sale and held-to-maturity debt securities

                                                           $28,978             $27,330                $28,467                 $28,356
Equity securities, at cost                                            $611                $611                   $624                    $624
Equity securities, at fair value                                       130                 130                    109                     109


Our securities portfolio is managed to maintain prudent levels of liquidity,
credit quality, and market risk while achieving returns that align with our
overall portfolio management strategy. The portfolio primarily includes high
quality, highly liquid investments reflecting our ongoing commitment to maintain
strong contingent liquidity levels and pledging capacity. U.S.
government-guaranteed notes and GSE-issued mortgage-backed securities represent
92% of the fair value of our debt securities portfolio holdings. Holdings backed
by mortgages dominate our portfolio and facilitate our ability to pledge those
securities to the FHLB for collateral purposes. For further discussion of the
liquidity coverage ratios, see "Regulation and Supervision - Liquidity
Requirements" in our 2021 Form 10-K.

The fair value of the AFS debt securities portfolio of $25.3 billion at March
31, 2022 decreased $748 million from $26.1 billion at December 31, 2021,
reflecting $697 million in portfolio growth offset by a $1.4 billion increase in
unrealized losses driven by higher rates. The decline in fair value of the HTM
debt securities portfolio of $278 million reflects $191 million from portfolio
runoff and $87 million due to higher rates.

As of March 31, 2022, the portfolio's average effective duration was 5.3 years
compared with 4.3 years as of December 31, 2021, as higher long-term rates drove
a decrease in both actual and projected securities prepayment speeds. We manage
our securities portfolio duration and convexity risk through asset selection and
securities structure, and maintain duration levels within our risk appetite in
the context of the broader interest rate risk framework and limits.

                                             Citizens Financial Group, Inc. | 14
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Loans and leases

Table 7: Composition of loans and leases, excluding LHFS (in millions)

                                             March 31, 2022              December 31, 2021             Change               Percent
Commercial and industrial(1)                                      $45,724                  $44,500                  $1,224                      3  %
Commercial real estate                                             14,268                   14,264                       4                      -
Leases                                                              1,529                    1,586                     (57)                    (4)
Total commercial                                                   61,521                   60,350                   1,171                      2
Residential mortgages                                              24,211                   22,822                   1,389                      6
Home equity                                                        12,264                   12,015                     249                      2
Automobile                                                         14,439                   14,549                    (110)                    (1)
Education                                                          13,306                   12,997                     309                      2
Other retail                                                        5,564                    5,430                     134                      2
Total retail                                                       69,784                   67,813                   1,971                      3
Total loans and leases                                           $131,305                 $128,163                  $3,142                      2  %


Total loans and leases increased $3.1 billion from $128.2 billion as of December
31, 2021, driven by 3% growth in retail, including the impact of the HSBC
transaction, as well as growth in mortgage, education and home equity, and 2%
growth in commercial.

Allowance for credit losses and unearned loans and leases


The ACL is a reserve to absorb estimated future credit losses in accordance with
GAAP. For additional information regarding the ACL, see Note 5 of this report,
and "-Critical Accounting Estimates - Allowance for Credit Losses" and Note 6 in
our 2021 Form 10-K.

The ACL of $1.9 billion to March 31, 2022 remained stable compared to December 31, 2021. For more information, see Note 5.

Table 8: ACL and associated coverage ratios by portfolio

                                                                 March 31, 2022                                         December 31, 2021
(in millions)                                   Loans and Leases      Allowance       Coverage           Loans and Leases    Allowance       Coverage
Allowance for Loan and Lease Losses
Commercial and industrial                                $45,724         $525              1.15  %              $44,500         $555              1.25  %
Commercial real estate                                    14,268          214              1.50                  14,264          220              1.54
Leases                                                     1,529           39              2.54                   1,586           46              2.92
Total commercial                                          61,521          778              1.26                  60,350          821              1.36
Residential mortgages                                     24,211          144              0.60                  22,822          144              0.63
Home equity                                               12,264           78              0.64                  12,015           82              0.69
Automobile                                                14,439          149              1.03                  14,549          154              1.05
Education                                                 13,306          321              2.41                  12,997          308              2.37
Other retail                                               5,564          250              4.49                   5,430          249              4.59
Total retail                                              69,784          942              1.35                  67,813          937              1.38
Total loans and leases                                  $131,305       $1,720              1.31  %             $128,163       $1,758              1.37  %
Allowance for Unfunded Lending Commitments
Commercial(1)                                                            $147              1.50  %                              $153              1.61  %
Retail(2)                                                                  11              1.37                                   23              1.42
   Total allowance for unfunded lending
commitments                                                               158                                                    176
Allowance for credit losses                             $131,305       $1,878              1.43  %             $128,163       $1,934              1.51  %

(1) The coverage ratio includes total trade provision for unfunded loan commitments and total trade provision for loan and lease losses in the numerator and total trade loans and leases in the denominator. (2) Coverage ratio includes total allowance for retail loans for unfunded loan commitments and total allowance for loan losses in the numerator and total retail loans in the denominator.


                                             Citizens Financial Group, Inc. | 15
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Table 9: Nonaccrual Loans and Leases
(dollars in millions)                            March 31, 2022        December 31, 2021             Change                Percent
Commercial and industrial                                $200                    $171                   $29                      17  %
Commercial real estate                                     11                      11                     -                       -
Leases                                                      1                       1                     -                       -
Total commercial                                          212                     183                    29                      16
Residential mortgages(1)                                  243                     201                    42                      21
Home equity                                               239                     220                    19                       9
Automobile                                                 52                      55                    (3)                     (5)
Education                                                  23                      23                     -                       -
Other retail                                               20                      20                     -                       -
Total retail                                              577                     519                    58                      11
Nonaccrual loans and leases                              $789                    $702                   $87                      12  %
Nonaccrual loans and leases to total loans and
leases                                                   0.60  %                 0.55  %                  5   bps
Allowance for loan and lease losses to
nonaccrual loans and leases                               218                     251                (3,264)
Allowance for credit losses to nonaccrual loans
and leases                                                238                     276                (3,769)


(1) Loans fully or partially guaranteed by the FHA, Virginia and USDA are classified as acquired.


Nonaccrual loans and leases of $789 million as of March 31, 2022 increased $87
million, or 12%, from December 31, 2021, primarily due to residential real
estate secured loans exiting forbearance. Total commercial nonaccrual loans and
leases were 0.3% of the commercial portfolio as of March 31, 2022 and December
31, 2021.

Table 10: Ratio of Net Charges to Average Loans and Leases

                                                                                       Three Months Ended March 31,
                                                                  2022                                                             2021
(dollars in millions)                      Net Charge-Offs      Average Balance       Ratio                 Net Charge-Offs        Average Balance       Ratio
Commercial and industrial                              $11         $44,947               0.10  %                          $77         $44,287               0.70  %
Commercial real estate                                   -          14,066                  -                              26          14,675               0.73
Leases                                                   -           1,560               0.10                               1           1,915               0.26
Total commercial                                        11          60,573               0.08                             104          60,877               0.69
Residential mortgages                                    -          23,461                  -                              (1)         19,388              (0.01)
Home equity                                             (9)         12,124              (0.32)                             (7)         12,001              (0.25)
Automobile                                               6          14,534               0.18                              11          12,229               0.35
Education                                               16          13,034               0.49                               7          12,436               0.24
Other retail                                            35           5,428               2.61                              44           5,916               3.00
Total retail                                            48          68,581               0.28                              54          61,970               0.35
Total loans and leases                                 $59        $129,154               0.19  %                         $158        $122,847               0.52  %


First quarter 2022 NCOs of $59 million decreased $99 million, or 63%, from $158
million in the first quarter of 2021, driven by decreases in commercial and
retail of $93 million and $6 million, respectively. First quarter 2022
annualized net charge-offs of 0.19% of average loans and leases were down 33
basis points from first quarter of 2021.

Retail NCOs declined as consumers continue to benefit from the fiscal support
provided during the pandemic, the rapid growth in jobs, and elevated residential
mortgage and auto loan collateral values. Commercial NCOs decreased given the
strong economic growth that began in the fourth quarter of 2020 and continued
solid credit performance. However, we continue to assess risks to the
macroeconomic environment. While the outlook is positive, uncertainty exists
given changing monetary and fiscal policies, the recent surge in inflation and
higher inflation expectations, labor shortages, continuing supply-chain
challenges, and possible consequences from Russia's invasion of Ukraine.

                                             Citizens Financial Group, Inc. | 16
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Commercial loan asset quality


Our commercial portfolio consists of traditional commercial and industrial
loans, commercial leases and commercial real estate loans. The portfolio is
predominantly focused on customers in our footprint and adjacent states in which
we have a physical presence where our local delivery model provides for strong
client connectivity. Additionally, we also do business in certain specialized
industry sectors on a national basis. As discussed in our 2021 Form 10-K, we
utilize regulatory classification ratings to monitor credit quality for
commercial loans and leases.

Table 11: Commercial loans and leases by regulatory classification

                                                                                              March 31, 2022
                                                                                                  Criticized
(in millions)                                                  Pass            Special Mention       Substandard       Doubtful          Total
Commercial and industrial                                       $43,594                   $845         $1,109             $176          $45,724
Commercial real estate                                           13,273                    512            472               11           14,268
Leases                                                            1,509                      8             11                1            1,529
Total commercial                                                $58,376                 $1,365         $1,592             $188          $61,521



                                                                                      December 31, 2021
                                                                                          Criticized
(in millions)                                           Pass          Special Mention       Substandard        Doubtful          Total
Commercial and industrial                               $42,254             $809               $1,294             $143          $44,500
Commercial real estate                                   13,319              406                  528               11           14,264
Leases                                                    1,512               49                   24                1            1,586
Total commercial                                        $57,085           $1,264               $1,846             $155          $60,350


Total commercial criticized balances of $3.1 billion as of March 31, 2022
decreased $120 million compared with December 31, 2021. Commercial criticized as
a percent of total commercial of 5.1% at March 31, 2022 decreased from 5.4% at
December 31, 2021.

Commercial and industrial criticized balances of $2.1 billion, or 4.7% of the
total commercial and industrial loan portfolio as of March 31, 2022, decreased
from $2.2 billion, or 5.0%, as of December 31, 2021. The percentage decrease was
driven by an increase in total commercial and industrial net book balances, with
a modest decrease in the criticized net book balances primarily attributable to
loan payoffs. Commercial and industrial criticized loans represented 68% of
total criticized loans as of March 31, 2022 compared to 69% as of December 31,
2021.

Commercial real estate criticized balances of $995 million, or 7.0% of the
commercial real estate portfolio, increased from $945 million, or 6.6% as of
December 31, 2021. The increase was primarily driven by downgrades from lowest
pass for a limited number of higher net book balance loans. Loss content,
however, remained stable. Commercial real estate accounted for 32% of total
criticized loans as of March 31, 2022 compared to 29% as of December 31, 2021.

                                             Citizens Financial Group, Inc. | 17
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Table 12: Commercial loans and leases by sector of activity

                                                                          March 31, 2022                          December 31, 2021
                                                                                           % of                                   % of
                                                                                       Total Loans                            Total Loans
(dollars in millions)                                                 Balance           and Leases              Balance        and Leases
Finance and insurance                                                       $9,610              7  %               $9,301              7  %
Health, pharma, and social assistance                                        2,862              2                   2,912              2
Accommodation and food services                                              3,442              3                   3,438              3
Professional, scientific, and technical services                             2,836              2                   2,665              2
Other manufacturing                                                          4,162              3                   4,087              3
Technology                                                                   4,183              3                   4,220              3
Retail trade                                                                 2,400              2                   2,237              2
Energy and related                                                           2,044              2                   2,017              2
Wholesale trade                                                              2,678              2                   2,358              2
Arts, entertainment, and recreation                                          1,107              1                   1,189              1
Other services                                                               1,911              2                   2,051              2
Administrative and waste management services                                 1,424              1                   1,396              1
Transportation and warehousing                                               1,302              1                   1,147              1
Consumer products manufacturing                                              1,303              1                   1,192              1
Automotive                                                                   1,208              1                   1,172              1
Educational services                                                           553              -                     573              -
Chemicals                                                                      939              1                     896              1
Real estate and rental and leasing                                             968              1                     739              -
All other(1)                                                                   375              -                     123              -
Total commercial and industrial                                             45,307             35                  43,713             34
Real estate and rental and leasing                                          12,807             10                  12,773             10
Accommodation and food services                                                615              -                     605              -
Finance and insurance                                                          624              1                     624              1
All other(1)                                                                   222              -                     262              -
Total commercial real estate                                                14,268             11                  14,264             11
Total leases                                                                 1,529              1                   1,586              1
Total commercial(2)                                                        $61,104             47  %              $59,563             46  %

(1) Deferred charges and costs are presented in All Others. (2) Excluding PPP loans of $417 million and $787 million from March 31, 2022 and
December 31, 2021respectively.

Retail Lending Asset Quality


For retail loans, we utilize credit scores provided by FICO, which are generally
refreshed on a quarterly basis, and the loan's payment and delinquency status to
monitor credit quality. Management believes FICO credit scores are considered
the strongest indicator of credit losses over the contractual life of the loan
as the scores are based on current and historical national industry-wide
consumer level credit performance data, and assist management in predicting the
borrower's future payment performance. The largest portion of the retail
portfolio is represented by borrowers located in the New England, Mid-Atlantic
and Midwest regions, although we have continued to lend selectively in areas
outside the footprint primarily in auto finance and education lending.

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Table 13: Analysis of the personal loan portfolio

                                                             March 31, 2022                                                                 December 31, 2021
                                                      Days Past Due and Accruing                                                     Days Past Due and Accruing
(dollars in millions)              Current         30-59        60-89         90+          Nonaccrual               Current       30-59        60-89         90+          Nonaccrual
Residential mortgages(1)               95.32  %      0.24  %      0.17  %      3.27  %             1.00  %            96.03  %      0.45  %      0.23  %      2.41  %             0.88  %
Home equity                            97.60         0.34         0.11            -                1.95               97.75         0.32         0.10            -                1.83
Automobile                             98.60         0.83         0.21            -                0.36               98.45         0.90         0.27            -                0.38
Education                              99.53         0.20         0.08         0.02                0.17               99.45         0.26         0.10         0.01                0.18
Other retail                           97.89         1.10         0.40         0.25                0.36               98.18         0.74         0.42         0.29                0.37
Total retail                           97.40  %      0.44  %      0.17  %      1.16  %             0.83  %            97.69  %      0.51  %      0.20  %      0.83  %             0.77  %


(1) 90+ days past due and accruing includes $792 million and $544 million of
loans fully or partially guaranteed by the FHA, VA, and USDA at March 31, 2022
and December 31, 2021, respectively.

For more information on the aging of accrued and unaccrued personal loans, see Note 5.

Table 14: Retail Asset Quality Metrics

                                                                   March 31, 2022        December 31, 2021
Average refreshed FICO for total portfolio                                  768                      768
CLTV ratio for secured real estate(1)                                        54  %                    56  %
Nonaccrual retail loans as a percentage of total retail                    0.83  %                  0.77  %


(1) The real estate secured portfolio CLTV is calculated as the mortgage and
second lien loan balance divided by the most recently available value of the
property.

Distressed Debt Restructurings


In the first quarter of 2020, we adopted the CARES Act and interagency guidance
issued by the bank regulatory agencies which provide that COVID-19-related
modifications to retail and commercial loans that met certain eligibility
criteria are exempt from classification as a TDR. We generally do not consider
payment deferrals and forbearance plans established due to the COVID-19 pandemic
and under the CARES Act to be TDRs. Relief provisions granted under the CARES
Act, including the TDR classification exemption for certain eligible loans,
expired on December 31, 2021.

For more information on TORs, see Note 6 of our 2021 Form 10-K.

Table 15: Restructurings of distressed debt at maturity and not at maturity

                                                                                            March 31, 2022
                                                                               As a % of Accruing TDRs
                                                                           30-89 Days           90+ Days Past
(dollars in millions)                             Accruing                  Past Due                 Due                Nonaccrual               Total
Commercial and industrial                                 $189                    0.2  %                  -  %               $80                   $269
Commercial real estate                                       1                      -                     -                    9                     10
Total commercial                                           190                    0.2                     -                   89                    279
Residential mortgages(1)                                   479                    2.5                  27.5                   78                    557
Home equity                                                169                    0.3                     -                   91                    260
Automobile                                                   8                    0.2                     -                   17                     25
Education                                                  110                    0.4                   0.1                   11                    121
Other retail                                                18                    0.2                     -                    2                     20
Total retail                                               784                    3.6                  27.6                  199                    983
Total                                                     $974                    3.8  %               27.6  %              $288                 $1,262


                                             Citizens Financial Group, Inc. | 19
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                                                                                           December 31, 2021
                                                                              As a % of Accruing TDRs
                                                                          30-89 Days           90+ Days Past
(dollars in millions)                              Accruing                Past Due                 Due                Nonaccrual               Total
Commercial and industrial                                $196                      -  %                  -  %               $74                   $270
Commercial real estate                                      1                      -                     -                    9                     10
Total commercial                                          197                      -                     -                   83                    280
Residential mortgages(1)                                  295              
     2.9                  12.0                   42                    337
Home equity                                               183                    0.6                     -                   74                    257
Automobile                                                  8                    0.2                     -                   22                     30
Education                                                 112                    0.5                   0.1                   11                    123
Other retail                                               20                    0.2                     -                    2                     22
Total retail                                              618                    4.5                  12.1                  151                    769
Total                                                    $815                    4.5  %               12.1  %              $234                 $1,049


(1) Includes $265 million and $98 million in 90+ days past due and accruing that
are fully or partially guaranteed by the FHA, VA, and USDA at March 31, 2022 and
December 31, 2021, respectively.

Deposits


Table 16: Composition of Deposits
(in millions)                                       March 31, 2022            December 31, 2021             Change              Percent
Demand                                                 $50,113                    $49,443                     $670                    1  %
Money market                                            45,342                     47,216                   (1,874)                  (4)
Checking with interest                                  32,417                     30,409                    2,008                    7
Savings                                                 26,104                     22,030                    4,074                   18
Term                                                     4,800                      5,263                     (463)                  (9)
Total deposits                                        $158,776                   $154,361                   $4,415                    3  %


Total deposits as of March 31, 2022 increased $4.4 billion, or 3%, to $158.8
billion, from $154.4 billion as of December 31, 2021, driven by the $6.3 billion
impact of the HSBC transaction, partially offset by seasonal impacts as well as
continued normalization from elevated liquidity levels. Citizens Access®, our
national digital platform, had $4.2 billion in deposits as of March 31, 2022,
down from $4.4 billion as of December 31, 2021.

Borrowed funds


Long-term borrowed funds of $5.9 billion as of March 31, 2022 decreased $1.0
billion from December 31, 2021 driven by the redemption of CBNA senior notes
during the quarter. For more information regarding our borrowed funds, see
"-Liquidity" and Note 8.

CAPITAL AND REGULATORY MATTERS


As a bank holding company and a financial holding company, we are subject to
regulation and supervision by the FRB. Our banking subsidiary, CBNA, is a
national banking association primarily regulated by the OCC. Our regulation and
supervision continues to evolve as the legal and regulatory frameworks governing
our operations continue to change. For more information, see "Regulation and
Supervision" in our 2021 Form 10-K.

Capital adequacy process


Our assessment of capital adequacy begins with our board-approved risk appetite
and risk management framework. This framework provides for the identification,
measurement and management of material risks. There have been no significant
changes to our capital adequacy risk appetite and risk management framework as
described in "-Capital and Regulatory Matters" in our 2021 Form 10-K.

Under the FRB's Tailoring Rules, Category IV firms, such as us, are subject to
biennial supervisory stress testing and are exempt from company-run stress
testing and related disclosure requirements. The FRB supervises Category IV
firms on an ongoing basis, including evaluation of the capital adequacy and
capital planning processes during off-cycle years. Annually, the FRB requires us
to submit a capital plan approved by our board of directors or one of its
committees. Our annual capital plan is due each year in April. We submitted our
2022 Capital Plan to the FRB on April 4, 2022. For more information, see the
"Tailoring of Prudential Requirements" section in Item 1 of our 2021 Form 10-K.

                                             Citizens Financial Group, Inc. | 20
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Under the Crisis Capital Buffer (“SCB”), the FRB will not object to capital plans on quantitative grounds and each company is required to maintain capital ratios above the sum of its minimum requirements and SCB to avoid restrictions on capital distributions and discretionary bonuses. Payments.


For Category IV firms, like us, the SCB will be re-calibrated with each biennial
supervisory stress test and updated annually to reflect our planned common stock
dividends. In addition, Category IV firms may elect to participate in the
supervisory stress test and receive an updated SCB requirement in a year in
which they are not subject to the supervisory stress test. Our SCB requirement
effective October 1, 2021, through September 30, 2022, is 3.4%. We are subject
to the 2022 supervisory stress test conducted by the FRB and expect to receive
an updated SCB from the FRB later this year. On March 22, 2022, the FRB approved
our application to acquire Investors and indicated that it will use the 2023
stress test to recalculate our SCB to incorporate the effects of the Investors
acquisition into our capital requirements.

Regulations relating to capital planning, regulatory reporting, stress testing
and capital buffer requirements applicable to firms like us are presently
subject to rule-making and potential further guidance and interpretation by the
applicable federal regulators. We will continue to evaluate the impact of these
and any other prudential regulatory changes, including their potential resultant
changes in our regulatory and compliance costs and expenses.

For more information, see the “Regulation and Oversight” and “-Capital and Regulatory Matters” sections in our 2021 Form 10-K.

Regulatory capital ratios and capital composition


Under the current U.S. Basel III capital framework, we and our banking
subsidiary, CBNA, must meet the following specific minimum requirements: CET1
capital ratio of 4.5%, tier 1 capital ratio of 6.0%, total capital ratio of 8.0%
and tier 1 leverage ratio of 4.0%. As a bank holding company, our SCB of 3.4% is
imposed on top of the three minimum risk-based capital ratios listed above and a
CCB of 2.5% is imposed on top of the three minimum risk-based capital ratios
listed above for our banking subsidiary.

Under the U.S. Basel III rules, the CET1 deduction threshold for MSRs, certain
deferred tax assets and investments in the capital of unconsolidated financial
institutions is 25%. As of March 31, 2022, we did not meet the threshold for
these additional capital deductions. MSRs or certain deferred tax assets not
deducted from CET1 capital are assigned a 250% risk weight and investments in
the capital of unconsolidated financial institutions not deducted from CET1
capital are assigned an exposure category risk weight.

In reaction to the COVID-19 pandemic, the FRB and the other federal banking
regulators adopted a final rule relative to regulatory capital treatment of ACL
under CECL. This rule allows electing banking organizations to delay the
estimated impact of CECL on regulatory capital for a two-year period ending
December 31, 2021, followed by a three-year transition period ending December
31, 2024. The three-year transition period will phase-in the aggregate amount of
capital benefit provided during the initial two-year delay. On December 31,
2021, the aggregate amount of capital benefit was $384 million. The reduction in
the capital benefit in 2022 is $96 million, or 6 basis points.

For additional discussion of the U.S. Basel III capital framework and its
related application, see "Regulation and Supervision" in our 2021 Form 10-K. The
table below presents our actual regulatory capital ratios under the U.S. Basel
III Standardized rules:

Table 17: Regulatory capital ratios under the WE Basel III standardized rules

                                                           March 31, 2022                            December 31, 2021            Required Minimum
(in millions, except ratio data)                       Amount               Ratio                  Amount            Ratio        Capital Ratios(1)
  CET1 capital                                              $15,643             9.7  %               $15,656             9.9  %                7.9  %
  Tier 1 capital                                             17,657            10.9                   17,670            11.1                   9.4
  Total capital                                              20,301            12.5                   20,244            12.7                  11.4
  Tier 1 leverage                                            17,657             9.6                   17,670             9.7                   4.0
  Risk-weighted assets                                      161,859                                  158,831
  Quarterly adjusted average assets                         183,089                                  181,800


(1) Required "Minimum Capital Ratios" are: CET1 capital of 4.5%; Tier 1 capital
of 6.0%; Total capital of 8.0%; and Tier 1 leverage of 4.0%. "Minimum Capital
Ratios" also include a SCB of 3.4%; N/A to Tier 1 leverage.
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At March 31, 2022, our CET1 capital, tier 1 capital and total capital ratios
were 9.7%, 10.9% and 12.5%, respectively, as compared with 9.9%, 11.1% and
12.7%, respectively, as of December 31, 2021. The CET1 and tier 1 capital ratios
decreased driven by $3.0 billion of RWA growth, dividends as described in
"-Capital Transactions" below, higher estimated goodwill and intangibles related
to the HSBC transaction and a decrease in the modified CECL transition amount as
a result of entering the CECL three-year transition period, partially offset by
net income for the three months ended March 31, 2022. The total capital ratio
decreased due to the changes in the CET1 capital ratio described above and lower
AACL partially offset by a reduction in the modified AACL transition amount as a
result of entering the CECL three-year transition period. At March 31, 2022, our
CET1 capital, tier 1 capital and total capital ratios were approximately 180
basis points, 150 basis points and 110 basis points, respectively, above their
regulatory minimums plus our SCB. All ratios remained well above the U.S. Basel
III minimums.

Both the Company and CBNA are subject to the standardized approach for
determining RWA. At March 31, 2022 RWA totaled $161.9 billion, up $3.0 billion
from December 31, 2021, driven by higher commercial and consumer loans including
higher home lending loans resulting from the HSBC transaction, MSRs, derivative
valuations and market risk, partially offset by lower loans held for sale and
commercial commitments.

From March 31, 2022the Tier 1 leverage ratio was 9.6%, compared to 9.7% at
December 31, 2021driven by an increase in quarterly adjusted average assets of
$1.3 billion and slightly lower Tier 1 capital.

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Amanda P. Whitten