Citizens Financial Group (CFG) Q3 2024 Earnings
How Did CFG Stock React to Q3 2024 Earnings?
S&P 500 over the same 30 days: +0.59%.
Did CFG Beat Earnings? Q3 2024 Results
Yes. Citizens Financial Group reported Q3 2024 earnings of $0.79 a share on Oct 16, 2024, beating the $0.79 consensus estimate by 0.0%. Revenue was $1.9B against a $1.9B estimate.
Citizens Financial Group posted third-quarter 2024 earnings of $0.79 per share on revenue of $1.90 billion, results that reflected meaningful pressure from higher funding costs and the drag of forward-starting interest rate swaps that commenced in July. Those swaps alone clipped net interest margin by 9 basis points, contributing to a 10 basis point sequential decline to 2.77% and pushing net interest income down 10% year-over-year to $1.37 billion. GAAP net income of $382 million fell 11% from a year ago, though underlying noninterest income offered some offset, rising 9% year-over-year to $534 million on stronger capital markets and card fees. Credit quality deteriorated modestly, with net charge-offs climbing to 54 basis points from 40 basis points a year ago and commercial real estate nonaccruals rising 81% year-over-year to $852 million. Looking ahead, management guided fourth-quarter net interest income up 1.5-2.5% sequentially and sees a path to a net interest margin of 3.25-3.40% over the medium term as legacy swaps mature and the non-core portfolio continues its planned wind-down.
- Forward-starting swaps dragged NIM down 9 bps in the quarter
- Private Bank reached break-even mid-quarter with $5.6B deposits and $4.1B AUM
- Non-Core portfolio run-off of $1.0 billion in Q3 ($3.2 billion YTD)
- Capital markets fees up $27M YoY driven by higher bond underwriting and M&A advisory
- Card fees up $13M YoY from favorable vendor contract renegotiations
- Wealth fees up $13M YoY from increased sales activity and higher AUM
- Underlying expense down 2% YoY reflecting headcount reductions and vendor efficiencies
- Lower effective tax rate of 18.7% vs 21.7% year ago benefiting from tax-advantaged investments
- Net charge-offs rose to 54 bps from 40 bps YoY driven by C&I and auto loans
- CRE General Office nonaccruals surged with reserve coverage increased to 12.1%
“We continue to be pleased with the strong execution of our key initiatives during the third quarter. 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. Our balance sheet remains strong across capital, liquidity, funding and loan loss reserves. While Q3 was impacted by the drag from forward-starting swaps that commenced in July, as well as some fees that pushed out to Q4, we project a strong fourth quarter and launch into 2025.”
Citizens Financial Group CEO, on the earnings call
What Was Citizens Financial Group's Outlook in Q3 2024?
For Q4 2024 (vs. Q3 2024 underlying results), Citizens expects: NII up 1.5-2.5% with NIM up ~5 bps and spot loans up slightly; noninterest income up mid-to-high single digits; noninterest expense up ~2%; net charge-offs broadly stable with ACL continuing to benefit from Non-Core run-off; CET1 ratio broadly stable with $200-$250 million in share repurchases; tax rate of ~20%. Assumes 25 bps Fed rate cuts in both November and December with YE2024 Fed funds target of 4.50%. Over the medium term (through 4Q27), management targets NIM of 3.25-3.40% driven by ~25 bps benefit from terminated swap maturities and ~15 bps from Non-Core run-off, plus ~30 bps from maturing legacy active swaps. Medium-term ROTCE target of 16-18%.
CFG YoY Financials
CFG Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.