10-QPeriod: Q3 FY2021

CITIZENS FINANCIAL GROUP INC/RI Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 3, 2021For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported solid results for the third quarter of 2021, with net income increasing by a significant 69% year-over-year to $530 million. Earnings per diluted share also saw a substantial jump to $1.18, up from $0.68 in the prior year's third quarter. The company's return on tangible common equity (ROTCE) improved to 13.7% from 8.3% year-over-year. This performance was driven by a substantial benefit from a lower provision for credit losses, reflecting strong credit performance and an improved macroeconomic outlook, partially offset by a decrease in noninterest income, primarily due to lower mortgage banking fees. Strategically, CFG announced significant acquisitions, including an agreement to acquire Investors Bancorp and the acquisition of 80 East Coast branches from HSBC. These moves are expected to expand the company's geographic footprint and enhance its customer base. While net interest income saw a modest 1% increase, driven by asset growth, the net interest margin slightly compressed due to elevated cash balances and a lower rate environment. Overall, the results demonstrate a recovery and strategic growth initiatives for Citizens Financial Group.

Financial Highlights

38 data points
Beta

Revenue

$1.66B

Net Income

$530.00M

31.9% Net Margin

EPS (Diluted)

$1.18

Total Assets

$187.01B

Cash & Equivalents

$13.72B

Free Cash Flow

$1.28B

Financial Statements
Beta
Revenue$1.66B
Interest Expense$77.00M
Net Income$530.00M
EPS (Basic)$1.18
EPS (Diluted)$1.18
Shares Outstanding (Basic)426.09M
Shares Outstanding (Diluted)427.84M

Key Highlights

  • 1Net income surged 69% year-over-year to $530 million, with diluted EPS rising to $1.18 from $0.68.
  • 2Return on tangible common equity (ROTCE) improved significantly to 13.7% from 8.3% in Q3 2020.
  • 3Provision for credit losses swung to a benefit of $33 million from an expense of $428 million, indicating improved credit quality and economic outlook.
  • 4Total revenue decreased 7% to $1.7 billion, primarily due to a 21% drop in noninterest income, largely from lower mortgage banking fees.
  • 5Net interest income grew 1% to $1.1 billion, supported by a 4% increase in interest-earning assets, though net interest margin slightly declined to 2.72%.
  • 6The company announced significant strategic acquisitions, including Investors Bancorp and HSBC branches, to expand its market presence.
  • 7Total deposits increased by 7% year-over-year to $151.9 billion, reflecting strong customer inflows.

Frequently Asked Questions

The primary driver of the significant increase in net income was a substantial benefit from the provision for credit losses, which shifted from an expense of $428 million in Q3 2020 to a benefit of $33 million in Q3 2021. This reflects strong credit performance and an improving macroeconomic outlook.

Noninterest income decreased by 21% year-over-year, mainly due to a decline in mortgage banking fees, which were impacted by lower gain-on-sale margins and production volumes. Other income also contributed to the decrease, largely due to a gain on the sale of education loans in the prior year's quarter.

The company announced two major acquisitions: Investors Bancorp and 80 East Coast branches from HSBC. These transactions are strategic moves to expand Citizens Financial Group's geographic footprint, particularly in key metropolitan areas, and to grow its customer base in attractive markets, supporting its national expansion strategy.

The net interest margin (FTE basis) slightly decreased by 11 basis points to 2.72% compared to the third quarter of 2020. This was primarily due to the impact of elevated cash balances and a lower interest rate environment, partially offset by an improved funding mix, better deposit pricing, and the benefit of accelerated PPP loan forgiveness.