10-QPeriod: Q1 FY2024

CITIZENS FINANCIAL GROUP INC/RI Quarterly Report for Q1 Ended Mar 31, 2024

Filed May 6, 2024For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported a decrease in net income and earnings per diluted common share for the first quarter of 2024 compared to the same period in 2023. This decline was primarily driven by a 12% decrease in net interest income, attributed to higher funding costs and a reduced net interest margin, despite an increase in interest-earning asset yields. The company also experienced an increase in noninterest expense, largely due to investments in its Private Bank and higher FDIC deposit insurance costs. Offsetting some of these pressures, noninterest income saw a notable increase, primarily from higher capital markets fees (underwriting and M&A advisory) and increased card fees. The company's balance sheet remains solid, with robust capital ratios and a sufficient liquidity position, though total deposits saw a slight seasonal decline. Management is focused on strategic initiatives to improve efficiency and performance across its banking segments.

Financial Highlights

37 data points
Beta

Revenue

$1.96B

Net Income

$334.00M

17.0% Net Margin

EPS (Diluted)

$0.65

Total Assets

$220.45B

Cash & Equivalents

$11.60B

Free Cash Flow

$554.00M

Financial Statements
Beta
Revenue$1.96B
Interest Expense$1.17B
Net Income$334.00M
EPS (Basic)$0.66
EPS (Diluted)$0.65
Shares Outstanding (Basic)461.36M
Shares Outstanding (Diluted)463.80M

Key Highlights

  • 1Net income available to common stockholders decreased by $184 million to $304 million for the three months ended March 31, 2024, compared to the prior year. Underlying net income, excluding notable items, was $365 million, down from $537 million.
  • 2Diluted earnings per common share declined to $0.65 from $1.00, or $0.79 on an Underlying basis, down from $1.10.
  • 3Total revenue decreased by $169 million to $1.96 billion, primarily due to a 12% decline in net interest income, driven by a lower net interest margin.
  • 4Noninterest income increased by $32 million (7%) to $517 million, driven by higher capital markets fees (+35%) and card fees (+19%).
  • 5Noninterest expense increased by $62 million (5%) to $1.36 billion, impacted by Private Bank start-up investments and increased FDIC special assessments.
  • 6The efficiency ratio (GAAP) worsened to 69.3% from 60.9%, and on an Underlying basis, it increased to 65.1% from 57.8%.
  • 7Total loans and leases decreased by 2% to $143.2 billion as of March 31, 2024, compared to December 31, 2023, reflecting balance sheet optimization and planned Non-Core portfolio runoff.

Frequently Asked Questions

The decline in net income and EPS was primarily driven by a decrease in net interest income, which fell 12% year-over-year due to a lower net interest margin. This was compounded by an increase in noninterest expenses, including costs related to the Private Bank startup and FDIC deposit insurance assessments.

Total revenue saw a decline primarily due to lower net interest income. However, noninterest income showed strength, increasing by 7%, led by significant growth in capital markets fees and card fees. This diversification helped mitigate some of the pressure from lower net interest income.

The efficiency ratio worsened in the quarter, indicating a decrease in operational efficiency compared to the prior year. On an Underlying basis, the efficiency ratio also increased. Profitability, as measured by Return on Tangible Common Equity (ROTCE), also declined, reflecting these pressures.

While total loans and leases saw a slight decrease, the company reported an increase in nonaccrual loans, particularly in the commercial real estate sector, driven by interest rate impacts and return-to-office dynamics. The provision for credit losses increased slightly, reflecting higher reserves against the CRE Office portfolio. However, overall loan loss coverage ratios remain stable.