10-QPeriod: Q1 FY2017

CITIZENS FINANCIAL GROUP INC/RI Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported a strong first quarter of 2017, with net income available to common stockholders increasing by 45% year-over-year to $313 million, or $0.61 per diluted share, compared to $216 million, or $0.41 per diluted share, in the prior year period. This robust performance was driven by a 12% increase in total revenue, fueled by an 11% rise in net interest income and a 15% increase in non-interest income. The company saw significant contributions from loan growth across both its Consumer and Commercial Banking segments, coupled with a 10 basis point improvement in its net interest margin. \n\nExcluding a one-time benefit of $23 million ($0.04 per share) from the settlement of certain state tax matters, "Underlying" net income was $297 million, still representing a substantial 33% increase. The company also demonstrated improved operational efficiency, with a 4% reduction in its efficiency ratio to 61.68% and positive operating leverage of 6.86%. Capital ratios remained strong and well above regulatory requirements. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

36 data points
Beta

Revenue

$1.38B

Net Income

$320.00M

23.1% Net Margin

EPS (Diluted)

$0.61

Total Assets

$150.28B

Cash & Equivalents

$3.99B

Free Cash Flow

$853.00M

Financial Statements
Beta
Revenue$1.38B
Interest Expense$155.00M
Net Income$320.00M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)509.45M
Shares Outstanding (Diluted)511.35M

Key Highlights

  • 1Net income available to common stockholders surged by 45% to $313 million ($0.61 per diluted share) in Q1 2017, up from $216 million ($0.41 per diluted share) in Q1 2016.
  • 2Total revenue increased by 12% to $1.38 billion, driven by strong growth in both net interest income (up 11%) and non-interest income (up 15%).
  • 3Net interest margin improved by 10 basis points to 2.96%, benefiting from higher loan yields and an 8% increase in average loans.
  • 4The efficiency ratio improved to 61.68% from 65.66% in the prior year period, indicating better operational efficiency.
  • 5Return on average tangible common equity (ROTCE) increased significantly to 9.68% from 6.61% in Q1 2016.
  • 6The company repurchased $130 million of its common stock during the quarter as part of its capital return strategy.
  • 7Capital ratios, including Common Equity Tier 1 (CET1) at 11.2%, remained substantially above regulatory minimums.

Frequently Asked Questions

Citizens Financial Group reported a significant increase in profitability. Net income available to common stockholders grew by 45% to $313 million, or $0.61 per diluted share, in Q1 2017, up from $216 million, or $0.41 per diluted share, in Q1 2016. This growth was primarily driven by higher total revenue.

Total revenue increased by 12% year-over-year, primarily due to an 11% increase in net interest income, supported by loan growth and a higher net interest margin, and a 15% increase in non-interest income, which benefited from strong performance in capital markets, card fees, foreign exchange, and mortgage banking fees.

Citizens Financial Group improved its operational efficiency, with its efficiency ratio decreasing to 61.68% from 65.66% in the prior year. Capital ratios remained robust, with the Common Equity Tier 1 (CET1) capital ratio at 11.2%, well above regulatory requirements. The company also returned capital to shareholders through dividends and share repurchases.

Yes, the Q1 2017 results included a $23 million ($0.04 per diluted share) benefit related to the settlement of certain state tax matters. Excluding this benefit, "Underlying" net income still showed a substantial 33% increase year-over-year.