Citizens Financial Group (CFG) Q2 2024 earnings summary

Executive summary

• Reported Q2 2024 underlying net income of $408 million and EPS of $0.82, with ROTCE at 11.1% and pre-provision profit up 2% sequentially; GAAP net income was $357 million and EPS $0.78.

• Strong fee performance, up 7% quarter-over-quarter, driven by Capital Markets, Wealth, and Card fees; Private Bank deposits reached $4.0 billion, up $1.6 billion sequentially.

• Expenses down 1% sequentially despite continued investment in the Private Bank; efficiency ratio improved to 64.6% underlying.

• Credit trends stable, with net charge-offs at 52 bps and ACL coverage at 1.63%.

• Capital and liquidity positions remain robust, with CET1 ratio at 10.7% and pro forma LCR at 119%.

Financial highlights

• Net interest income was $1.41 billion, down 2% sequentially and 11% year-over-year, with NIM at 2.87%, down 4 bps from Q1.

• Underlying noninterest income increased 7% sequentially and 8% year-over-year, led by Capital Markets, Card, and Wealth fees.

• Noninterest expense (Underlying) decreased 1% sequentially but rose 3% year-over-year, reflecting Private Bank investment.

• Net charge-offs were $184 million (0.52% of average loans), up 2 bps sequentially; provision for credit losses was $182 million.

• Efficiency ratio (Underlying) improved to 64.6% from 65.1% sequentially.

Outlook and guidance

• Q3 NII expected down 1.1%-2% due to swap costs; non-interest income to rise slightly; expenses stable; net charge-offs to decline modestly.

• Full-year NII to be at upper end of down 6%-9% range; fees to exceed 6%-9% guidance; NII and NIM expected to rebound in Q4, with positive operating leverage.

• CET1 ratio expected at ~10.5% with $250-$300 million in share repurchases planned.

• Medium-term NIM target range of 3.25-3.40% driven by Non-Core runoff and swaps.

• Minimal impact from notable items expected in 2H24; assumes two 25 bp Fed rate cuts by year-end.