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Citizens Financial (CFG) Q2 Earnings Miss on Lower Loan Demand
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Citizens Financial Group (CFG - Free Report) has reported second-quarter 2024 earnings per share (EPS) of 78 cents, missing the Zacks Consensus Estimate of 79 cents. The bottom line declined from 92 cents reported in the year-ago quarter.
Underlying EPS for the second quarter of 2024 was 82 cents, down from $1.04 reported in the year-ago quarter.
Shares of the company gained more than 2% in the pre-market trading on improved commercial banking performance.
Results were adversely affected by lower net interest income (NII) and a rise in provisions. However, increased non-interest income and reduced expenses offered some support. Additionally, a strong capital position was a positive factor.
Capital market fees of $134 million surged 63.4% year over year, driven by growth in bond underwriting and loan syndication fees, partially offset by lower merger and acquisition advisory fees.
Net income was $392 million, down 18% from the prior-year quarter.
Revenues and Expenses Fall
Total revenues in the second quarter were $1.96 billion, which beat the consensus estimate of $1.95 billion. However, the top line declined 6.3% year over year.
Citizens Financial’s NII decreased 11.2% year over year to $1.41 billion due to a lower net interest margin and a decline in average interest-earning assets. Our estimate for NII was $1.42 billion.
The net interest margin (NIM) shrunk 30 basis points to 2.86% on the back of increased funding and swap costs and the impact of building liquidity, partially offset by higher yields on interest-earning assets and the benefit of non-core run off. Our estimate for NIM was 2.82%.
The non-interest income increased 9.3% to $553 million. The improvement resulted from increased service charges and fees, capital market fees, card fees and wealth fees. Our estimate for non-interest income was $534 million.
Non-interest expenses marginally decreased to $1.3 billion. Our estimate for the metric was $1.35 billion.
The efficiency ratio of 66.3% in the second quarter increased from 62.3% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Jun 30, 2024, period-end total loans and leases balances were $141.8 billion, down 1% sequentially. Total deposits decreased marginally to $176.4 billion.
Credit Quality Worsens
As of Jun 30, 2024, CFG’s provision for credit losses was $182 million, up 3.4% from the year-ago quarter. The allowance for credit losses increased marginally to $2.3 billion.
Further, net charge-offs jumped 21.1% to $184 million. Our estimate for the metric was $181.3 million. Non-accrual loans and leases were up 28.2% to $1.53 billion.
Capital Position Improves
As of Jun 30, 2024, the tier 1 leverage ratio was 9.4%, which remained unchanged from the prior-year quarter.
The common equity tier 1 capital ratio was 10.7% compared with 10.3% at the end of the prior-year quarter. Further, the total capital ratio was 14%, up from 13.3% in the prior-year quarter.
Share Repurchase Update
In the second quarter of 2024, CFG repurchased $200 million of common shares and paid $193 million in common dividends.
Our View
Citizens Financial’s results highlight a weak quarter amid the current macroeconomic backdrop. A decline in NII and increased provisions are near-term concerns. Nonetheless, its strategic and efficiency initiatives, along with inorganic growth moves, should drive its momentum back.
Citizens Financial Group, Inc. Price, Consensus and EPS Surprise
BOK Financial Corporation (BOKF - Free Report) is slated to report second-quarter 2024 results on Jul 22. It has a Zacks Rank #3 at present.
Over the past month, the Zacks Consensus Estimate for BOKF’s quarterly earnings per share has moved 2.7% north to $1.89.
Webster Financial Corporation (WBS - Free Report) is scheduled to release second-quarter 2024 earnings on Jul 23. The company carries a Zacks Rank #3 at present.
The consensus estimate for WBS’ quarterly earnings has moved 1.5% south to $1.34 per share over the past 30 days.
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Citizens Financial (CFG) Q2 Earnings Miss on Lower Loan Demand
Citizens Financial Group (CFG - Free Report) has reported second-quarter 2024 earnings per share (EPS) of 78 cents, missing the Zacks Consensus Estimate of 79 cents. The bottom line declined from 92 cents reported in the year-ago quarter.
Underlying EPS for the second quarter of 2024 was 82 cents, down from $1.04 reported in the year-ago quarter.
Shares of the company gained more than 2% in the pre-market trading on improved commercial banking performance.
Results were adversely affected by lower net interest income (NII) and a rise in provisions. However, increased non-interest income and reduced expenses offered some support. Additionally, a strong capital position was a positive factor.
Capital market fees of $134 million surged 63.4% year over year, driven by growth in bond underwriting and loan syndication fees, partially offset by lower merger and acquisition advisory fees.
Net income was $392 million, down 18% from the prior-year quarter.
Revenues and Expenses Fall
Total revenues in the second quarter were $1.96 billion, which beat the consensus estimate of $1.95 billion. However, the top line declined 6.3% year over year.
Citizens Financial’s NII decreased 11.2% year over year to $1.41 billion due to a lower net interest margin and a decline in average interest-earning assets. Our estimate for NII was $1.42 billion.
The net interest margin (NIM) shrunk 30 basis points to 2.86% on the back of increased funding and swap costs and the impact of building liquidity, partially offset by higher yields on interest-earning assets and the benefit of non-core run off. Our estimate for NIM was 2.82%.
The non-interest income increased 9.3% to $553 million. The improvement resulted from increased service charges and fees, capital market fees, card fees and wealth fees. Our estimate for non-interest income was $534 million.
Non-interest expenses marginally decreased to $1.3 billion. Our estimate for the metric was $1.35 billion.
The efficiency ratio of 66.3% in the second quarter increased from 62.3% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Jun 30, 2024, period-end total loans and leases balances were $141.8 billion, down 1% sequentially. Total deposits decreased marginally to $176.4 billion.
Credit Quality Worsens
As of Jun 30, 2024, CFG’s provision for credit losses was $182 million, up 3.4% from the year-ago quarter. The allowance for credit losses increased marginally to $2.3 billion.
Further, net charge-offs jumped 21.1% to $184 million. Our estimate for the metric was $181.3 million. Non-accrual loans and leases were up 28.2% to $1.53 billion.
Capital Position Improves
As of Jun 30, 2024, the tier 1 leverage ratio was 9.4%, which remained unchanged from the prior-year quarter.
The common equity tier 1 capital ratio was 10.7% compared with 10.3% at the end of the prior-year quarter. Further, the total capital ratio was 14%, up from 13.3% in the prior-year quarter.
Share Repurchase Update
In the second quarter of 2024, CFG repurchased $200 million of common shares and paid $193 million in common dividends.
Our View
Citizens Financial’s results highlight a weak quarter amid the current macroeconomic backdrop. A decline in NII and increased provisions are near-term concerns. Nonetheless, its strategic and efficiency initiatives, along with inorganic growth moves, should drive its momentum back.
Citizens Financial Group, Inc. Price, Consensus and EPS Surprise
Citizens Financial Group, Inc. price-consensus-eps-surprise-chart | Citizens Financial Group, Inc. Quote
Currently, Citizens Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Banks
BOK Financial Corporation (BOKF - Free Report) is slated to report second-quarter 2024 results on Jul 22. It has a Zacks Rank #3 at present.
Over the past month, the Zacks Consensus Estimate for BOKF’s quarterly earnings per share has moved 2.7% north to $1.89.
Webster Financial Corporation (WBS - Free Report) is scheduled to release second-quarter 2024 earnings on Jul 23. The company carries a Zacks Rank #3 at present.
The consensus estimate for WBS’ quarterly earnings has moved 1.5% south to $1.34 per share over the past 30 days.