Citizens Financial Group Inc
Q4 2024 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.14%.
Did CFG Beat Earnings? Q4 2024 Results
Citizens Financial Group posted a mixed fourth quarter for 2024, nudging just below Wall Street's earnings target while clearing the bar on revenue. The Providence-based lender reported diluted EPS of $0.83, a hair beneath the $0.83 consensus estimate, while revenue of $1.99 billion edged past expectations of $1.96 billion by 1.35%, though the top line fell 37.5% from the year-ago period. The clearest engine behind the quarter was net interest margin expansion, with NIM widening 10 basis points sequentially to 2.87% as deposit costs declined and fixed-rate assets repriced higher, lifting net interest income 3.1% sequentially to $1.41 billion. Underlying noninterest income also contributed, rising 13% year-over-year to $564 million on stronger capital markets and card fee activity. Looking ahead, management guided for full-year 2025 NII growth of 3-5%, fee income growth of 8-10%, and positive operating leverage of approximately 1.5%, with a medium-term return on tangible common equity target of 16-18%.
- Net interest margin expansion of 10 bps QoQ to 2.87% driven by lower deposit costs and fixed-rate asset repricing
- Capital markets fees up $27MM QoQ on higher loan syndication and M&A fees
- Private Bank achieved first profitable quarter contributing $0.01 to EPS
- Non-Core portfolio run-off of $0.9 billion in Q4, $4.2 billion in FY2024
- Interest-bearing deposit costs declined 31 bps QoQ with cumulative down-beta of ~50%
- Card fees benefited from favorable vendor contract renegotiations
- TOP 9 program achieved ~$150MM year-end pre-tax run rate benefit
- Consumer Banking efficiency ratio improved to 62.60% from 63.53% in Q3
- Commercial Banking efficiency ratio improved to 44.78% from 43.84% in Q3
“We were pleased to post solid performance in Q4 given strong execution of our key initiatives and nice improvement in our net interest margin. Good sequential growth in revenues delivered a return to positive operating leverage, and our balance sheet remains strong with CET1 at 10.8%, LDR below 80% and credit metrics all trending favorably. Our Private Bank hit year end balances of $7 billion in deposits, $3.1 billion in loans, and $4.7 billion AUM, tracking very well to targets. I would like to thank our colleague base for their fine effort and dedication in continuing to serve our customers well and in positioning us for a strong 2025 and bright future.”
Citizens Financial Group CEO, on the earnings call
Forward Guidance & Outlook
For FY2025, Citizens expects underlying NII growth of 3-5% with full-year NIM of approximately 3.00%; noninterest income up approximately 8-10% driven primarily by Capital Markets and Wealth; noninterest expense up approximately 4% (approximately 2.6% excluding Private Bank & Private Wealth investments); net charge-offs of approximately $650-700 million (high-40s basis points) with ACL likely seeing releases over the year; CET1 ratio of 10.5-10.75%; tax rate of approximately 21%; and positive operating leverage of approximately 1.5%. Spot loans expected up low single digits driven by Private Bank and 2H25 Commercial activity. For 1Q25, NII expected down 1.5-2.5% (including approximately $25 million day count impact), fees down approximately 2% on seasonality, expenses up 1.5-2%, and net charge-offs down moderately with continued reserve release expected. Medium-term targets include ROTCE of 16-18%, CET1 of 10.00-10.50%, efficiency ratio in the mid-50s percent, NIM range of 3.25-3.50%, and credit normalization to 35-40 basis points. Key assumptions include Fed funds reaching 4% by year-end 2025 and terminal rate of approximately 3.50% by year-end 2027.
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Figures from SEC filings and company reports. Not investment advice.