Citizens Financial Group Inc
Q2 2024 Earnings
Did CFG Beat Earnings? Q2 2024 Results
Citizens Financial Group posted a resilient second quarter, reporting underlying earnings per share of $0.82 on revenue of $1.96 billion, as a surge in fee income helped cushion persistent pressure on net interest income. GAAP net income came in at $392 million, or $0.78 per diluted share, while the underlying figure of $408 million reflected $32 million in pre-tax charges tied to integration costs and efficiency initiatives. The headline story was a tug-of-war between NII, which fell 11% year-over-year to $1.41 billion as net interest margin compressed to 2.87%, and noninterest income, where underlying fees climbed 8% year-over-year to $549 million, lifted by a strong capital markets quarter. Credit quality remained a watchpoint, with net charge-offs at 52 basis points and commercial real estate stress pushing nonaccrual loans to 1.08% of total loans. Looking ahead, management guided for NII to dip another 1-2% in Q3 before rebounding in Q4, with the company targeting a medium-term NIM of 3.25% to 3.40% as swap tailwinds and Non-Core portfolio run-off take hold.
- Strong fee performance with Capital Markets fees up 14% QoQ and record Card and Wealth fees
- Expense discipline with underlying expenses down 1% QoQ
- Private Bank deposits grew $1.6 billion to $4.0 billion
- Balance sheet optimization including Non-Core portfolio run-off of $1.1 billion in Q2
- Interest-bearing deposit costs declined 3 bps to 2.82% with cumulative beta improving to 51%
- GAAP operating leverage turned positive at 4.42% in Q2 2024
- GAAP efficiency ratio improved to 66.27% from 69.33% in Q1 2024
“We delivered solid performance in the second quarter, featuring strong fee performance across Capital Markets, Wealth and Card, excellent deposit trends, good expense discipline and credit metrics in line with expectations.”
Citizens Financial Group CEO, on the earnings call
Forward Guidance & Outlook
For Q3 2024 vs. Q2 2024: NII expected down ~1-2% (incorporating impact of July 2024 forward starting swaps); noninterest income up slightly; noninterest expense stable; net charge-offs down modestly; CET1 ratio ~10.5% with ~$250-$300 million in share repurchases; tax rate ~20-21%. For FY2024: PPNR tracking broadly in-line with January guidance range, with NII trending towards the upper end of the range reflecting lower loan balances, and fees a little higher; expenses broadly in-line. NII/NIM expected to rebound in Q4 2024 with a return to positive operating leverage. Assumes 25 bp Fed rate cuts in September and December with YE2024 Fed Funds target of 5%. Medium-term: targets ~16-18% ROTCE and NIM range of 3.25-3.40%, supported by significant NII tailwinds from Non-Core run-off and swaps portfolio. Private Bank expected to reach breakeven in Q4 2024 and progress towards 20%+ ROTCE. CET1 ratio expected to converge to 10.0-10.5% range over the medium term.
CFG YoY Financials
CFG Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.