Citizens Financial Group Inc
Q1 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +13.16%.
Did CFG Beat Earnings? Q1 2025 Results
Citizens Financial Group posted a solid if unspectacular first quarter, with earnings per share of $0.77 edging past the $0.75 consensus estimate by 2.68%, even as revenue of $1.94 billion came in essentially flat against expectations and declined 38.1% year over year. The headline revenue drop largely reflects the ongoing rundown of the company's Non-Core portfolio, a strategic effort that accelerated meaningfully in the quarter when Citizens agreed to sell roughly $1.90 billion in Non-Core education loans, shrinking that portfolio from $6.90 billion to $4.20 billion and positioning the move as accretive to net interest margin and returns over time. Net interest margin improved 3 basis points to 2.90% on an FTE basis, aided by falling deposit costs, while the Private Bank continued scaling rapidly, with deposits reaching $8.70 billion. Management reaffirmed full-year guidance, projecting second-quarter NII up approximately 3% and net charge-offs down slightly, with a medium-term NIM target of 3.25% to 3.50% still firmly in view despite flagged macroeconomic uncertainty around tariff impacts.
- Net interest margin improvement of 3 bps to 2.90% driven by lower deposit costs and improved deposit mix
- Interest-bearing deposit costs declined 18 bps to 2.37% with cumulative down-beta of ~53%
- Private Bank deposits grew $1.7 billion QoQ to $8.7 billion, contributing $0.04 to EPS
- Wealth fees increased $6 million on higher annuity product sales
- FX and derivative products revenue increased $4 million on commodity hedging activity
- Capital markets fees declined $21 million due to seasonality and market uncertainty in M&A
- Noninterest expense up 1.7% primarily from seasonal payroll tax increases
- Provision for credit losses decreased to $153 million from $162 million reflecting improving loan mix
- Net charge-offs increased to $200 million (58 bps annualized), up 5 bps QoQ, driven by education loan charge-offs including Non-Core sale impact
- Total allowance for credit losses declined 2% QoQ to $2.21 billion
- GAAP efficiency ratio improved 142 bps YoY to 67.91%
- Tangible book value per share increased 13% YoY to $33.97
“We were pleased with our execution in Q1 as we delivered financial results in line with our expectations, as well as strong progress on our strategic initiatives like the Private Bank/Private Wealth buildout.”
Citizens Financial Group CEO, on the earnings call
Forward Guidance & Outlook
Citizens broadly reaffirmed its full-year 2025 guidance. For Q2 2025 vs Q1 2025: NII expected up ~3% with NIM up ~5 bps and earning assets stable; noninterest income up mid-to-high single digits, though macro uncertainty could impact capital markets; noninterest expense broadly stable; net charge-offs expected down slightly; CET1 ratio of 10.5-10.75%; tax rate of 20-21%. Management flagged select risks if current macro challenges persist, including potential volatility impacts on capital markets, moderated 2H25 loan growth, and higher provision in a recession scenario. Potential offsets include additional share repurchases from lower loan growth, lower deposit costs, and further expense management. The medium-term NIM target of 3.25% to 3.50% was reaffirmed, with meaningful time-based tailwinds from Non-Core runoff and terminated swap roll-off. The company targets ~16-18% ROTCE over the medium term and expects the Private Bank to deliver ~20-24% return on equity.
CFG YoY Financials
CFG Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.