Citizens Financial Group Reports Third Quarter 2024 Miss with $0.77 EPS

Citizens Financial Group, Inc. reported a net income of $382 million for the third quarter of 2024, translating to an earnings per share (EPS) of $0.77. On an underlying basis, net income was slightly higher at $392 million, with an EPS of $0.79.

This performance reflects a decrease from the previous quarter, with total revenue falling to $1.901 billion, a 3% decline from the second quarter of 2024. The reported net interest income was $1.369 billion, down by 2.9% quarter-over-quarter, largely due to a 10 basis point drop in net interest margin (NIM), primarily attributed to the impact of forward-starting swaps.

Despite the challenges, the company maintained strong liquidity, with a Common Equity Tier 1 (CET1) ratio of 10.6% and a loan-to-deposit ratio (LDR) of 80.8%. Average deposits remained stable quarter-over-quarter, although there was noticeable growth in the Private Bank sector, with spot deposits increasing by $1.6 billion to $5.6 billion.

The company’s expenses decreased by 1.3% quarter-over-quarter, indicating effective cost management despite continued investments in the Private Bank segment.

Citizen Financial Group Fails to Meet Expectations in Third Quarter 2024

The third quarter performance of Citizens Financial Group fell short of market expectations, which had anticipated an EPS of $1.8 and revenue of $1.94 billion. The actual EPS of $0.77 and revenue of $1.901 billion were considerably below these forecasts.

This shortfall can be attributed to several factors, including a decline in net interest income and noninterest income, which decreased by 10% and 4% respectively from the second quarter of 2024. The net interest margin, a critical profitability metric, also saw a reduction, dropping by 10 basis points from the previous quarter.

Noninterest income was particularly impacted by a decrease in capital markets fees, which fell by 30% quarter-over-quarter due to seasonally lower loan syndication and debt underwriting fees. Additionally, the company experienced a delay in several anticipated third-quarter M&A fees, which are now expected to materialize in the fourth quarter.

Despite these setbacks, there were areas of growth, such as an 8% increase in noninterest income year-over-year, driven by higher card and wealth fees.

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Guidance and Future Outlook, $0.42 per share Dividend Announcement

Citizens Financial Group has remained optimistic about its future performance. The company projects a strong fourth quarter, buoyed by expected improvements in net interest income and the realization of delayed fees from the third quarter.

The anticipated launch of the TOP 10 program, with a projected impact of over $100 million, is expected to further bolster the company’s financial performance. This initiative, along with continued growth in the Private Bank sector, is expected to drive revenue and profitability in the coming quarters.

The company also announced a quarterly dividend of $0.42 per share, reflecting confidence in its capital position and future earnings potential. This dividend is scheduled for payment on November 13, 2024, to shareholders of record as of October 30, 2024.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.