On October 16, 2024, Citizens Financial Group Inc (CFG, Financial) released its 8-K filing for the third quarter of 2024. The bank holding company, headquartered in Providence, Rhode Island, reported a net income of $382 million and earnings per share (EPS) of $0.77, both falling short of analyst estimates of $0.80 EPS. The company's total revenue for the quarter was $1,901 million, also below the estimated $1,937.52 million.
Company Overview
Citizens Financial Group Inc (CFG, Financial) operates primarily through its consumer and commercial banking segments, offering a range of retail and commercial products, including capital markets and wealth options. With over 1,100 branches across 14 states, CFG is concentrated in the Northeast and manages over $220 billion in total assets, deriving most of its revenue from the Consumer Banking Segment.
Performance and Challenges
The third quarter results reflect a challenging environment for CFG, with net interest income declining by 2.9% quarter-over-quarter due to a 10 basis point drop in net interest margin (NIM). This decline was primarily attributed to the impact of forward-starting swaps. Additionally, noninterest income decreased by 2.7%, driven by seasonally lower capital markets fees. These challenges highlight the pressures CFG faces in maintaining profitability amidst fluctuating interest rates and market conditions.
Financial Achievements
Despite the challenges, CFG maintained a strong liquidity profile with a loan-to-deposit ratio (LDR) of 80.8% and a Common Equity Tier 1 (CET1) ratio of 10.6%. The bank's tangible book value per share increased by 9.6% quarter-over-quarter, reflecting a net AOCI benefit. These metrics are crucial for banks as they indicate financial stability and the ability to withstand economic fluctuations.
Key Financial Metrics
| Metric | 3Q24 | 2Q24 | 3Q23 |
|---|---|---|---|
| Total Revenue ($ millions) | 1,901 | 1,963 | 2,014 |
| Net Income ($ millions) | 382 | 392 | 430 |
| EPS | 0.77 | 0.78 | 0.85 |
| CET1 Ratio (%) | 10.6 | 10.7 | 10.4 |
Analysis and Commentary
CFG's performance in Q3 2024 underscores the impact of macroeconomic factors on its financial results. The decline in net interest income and noninterest income reflects broader industry challenges, including interest rate volatility and market conditions. However, the bank's strong capital ratios and liquidity position provide a buffer against these challenges.
“We continue to be pleased with the strong execution of our key initiatives during the third quarter,” said Chairman and CEO Bruce Van Saun. “Our Private Bank reached $5.6 billion in deposits and $4.1 billion in AUM, our NYC Metro region continues to achieve strong growth, and we are close to launching a TOP 10 program with $100 million plus impact.”
CFG's strategic initiatives, such as the growth of its Private Bank and regional expansion, are expected to drive future performance. The bank's focus on maintaining a robust balance sheet and capital position will be critical as it navigates the current economic landscape.
Explore the complete 8-K earnings release (here) from Citizens Financial Group Inc for further details.
