10-QPeriod: Q1 FY2018

CITIZENS FINANCIAL GROUP INC/RI Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 9, 2018For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported a strong first quarter of 2018, with net income reaching $388 million, a 21% increase year-over-year, translating to diluted earnings per share of $0.78, up 28%. This performance was driven by a 6% increase in total revenue to $1.5 billion, primarily fueled by a 9% rise in net interest income to $1.1 billion. The company's net interest margin improved by 20 basis points to 3.16%, benefiting from higher interest-earning asset yields and a favorable loan mix, despite increased funding costs. Key drivers of the improved profitability include growth in both consumer and commercial banking segments, with Consumer Banking net income up 79% and Commercial Banking net income up 19%. The company also saw a decrease in provision for credit losses by 19% and a reduction in net charge-offs by 20%, indicating a stable credit quality environment. Capital and liquidity positions remain robust, with CET1 capital ratio at 11.2%, well above regulatory minimums. The company continued its capital return strategy, paying dividends and repurchasing shares.

Financial Highlights

37 data points
Beta

Revenue

$1.46B

Net Income

$388.00M

26.5% Net Margin

EPS (Diluted)

$0.78

Total Assets

$153.45B

Cash & Equivalents

$3.86B

Free Cash Flow

$704.00M

Financial Statements
Beta
Revenue$1.46B
Interest Expense$237.00M
Net Income$388.00M
EPS (Basic)$0.78
EPS (Diluted)$0.78
Shares Outstanding (Basic)487.50M
Shares Outstanding (Diluted)489.27M

Key Highlights

  • 1Net income increased by 21% to $388 million, with diluted EPS rising 28% to $0.78.
  • 2Total revenue grew 6% to $1.5 billion, driven by a 9% increase in net interest income to $1.1 billion.
  • 3Net interest margin expanded by 20 basis points to 3.16%, reflecting higher asset yields and improved loan mix.
  • 4Provision for credit losses decreased by 19% to $78 million, and net charge-offs fell by 20% to $70 million.
  • 5Consumer Banking net income saw a significant increase of 79% to $170 million, while Commercial Banking net income grew 19% to $215 million.
  • 6The Common Equity Tier 1 (CET1) capital ratio remained strong at 11.2%, exceeding regulatory requirements.
  • 7The company returned capital to shareholders through dividends totaling $108 million and share repurchases of $175 million.

Frequently Asked Questions

Citizens Financial Group's revenue increased by 6% to $1.5 billion, primarily driven by a 9% rise in net interest income to $1.1 billion. This was supported by a 20 basis point expansion in net interest margin to 3.16%, attributed to higher yields on interest-earning assets and a favorable shift in the loan mix towards higher-yielding categories, partially offset by increased deposit and funding costs.

Credit quality remained strong. The provision for credit losses decreased by 19% to $78 million, and net charge-offs fell by 20% to $70 million. The allowance for loan and lease losses as a percentage of total loans and leases remained stable at 1.12%, and the ratio of allowance for loan and lease losses to nonperforming loans and leases improved slightly to 144%.

Citizens Financial Group demonstrated its commitment to returning capital by paying quarterly common stock dividends of $0.22 per share, totaling $108 million, and repurchasing $175 million of its outstanding common stock during the first quarter of 2018. The timing and amount of future capital distributions will depend on financial performance, capital position, and market conditions.

Both segments showed positive performance. Consumer Banking net income increased significantly by 79% to $170 million, driven by a 15% increase in net interest income and improved efficiency. Commercial Banking net income grew 19% to $215 million, benefiting from a modest increase in net interest income and a significant reduction in the provision for credit losses, although noninterest expense increased.