On July 17, 2024, Citizens Financial Group Inc (CFG, Financial) released its 8-K filing for the second quarter of 2024. Citizens Financial Group is a bank holding company headquartered in Providence, Rhode Island. Its two primary business segments are consumer banking and commercial banking. Citizens offers a mix of retail and commercial products including capital markets and wealth options. The bank has over 1,100 branches in 14 states, although it is concentrated in the Northeast. It has over $220 billion of total assets. It generates maximum revenue from Consumer Banking Segment.
Quarterly Performance and Challenges
Citizens Financial Group Inc (CFG, Financial) reported a net income of $392 million for Q2 2024, translating to an earnings per share (EPS) of $0.78. This is a notable increase from the previous quarter's net income of $334 million and EPS of $0.65. However, when compared to the same quarter last year, net income decreased from $478 million, and EPS dropped from $0.92.
The company faced challenges with a 2% quarter-over-quarter decline in net interest income (NII) to $1.41 billion, primarily driven by a 4 basis point decline in net interest margin (NIM) due to swaps impact. Additionally, period-end and average loans decreased by 1% quarter-over-quarter, reflecting balance sheet optimization and commercial paydowns.
Financial Achievements
Despite the challenges, Citizens Financial Group Inc (CFG, Financial) achieved several financial milestones. The company reported strong fee performance, with noninterest income increasing by 7% quarter-over-quarter to $553 million. This was driven by higher capital markets fees, record wealth and card fees, and increased mortgage banking fees.
Expenses were down by 1% quarter-over-quarter, reflecting good expense discipline despite continued investment in the Private Bank. The company's liquidity profile remained strong, with a spot loan-to-deposit ratio (LDR) improving to 80.4% and a pro forma liquidity coverage ratio (LCR) of 119%, exceeding the Category 1 Bank requirement of 100%.
Income Statement Highlights
| Metric | 2Q24 | 1Q24 | 2Q23 |
|---|---|---|---|
| Total Revenue ($ millions) | 1,963 | 1,959 | 2,094 |
| Net Income ($ millions) | 392 | 334 | 478 |
| EPS ($) | 0.78 | 0.65 | 0.92 |
| Underlying EPS ($) | 0.82 | 0.79 | 1.04 |
Balance Sheet and Cash Flow Highlights
Citizens Financial Group Inc (CFG, Financial) reported period-end loans and leases of $141.8 billion, down from $143.2 billion in the previous quarter. Period-end deposits remained stable at $176.4 billion. The company's CET1 ratio improved to 10.7%, up from 10.6% in the previous quarter, indicating a strong capital position.
The allowance for credit losses (ACL) coverage increased to 1.63%, reflecting a robust credit quality. Net charge-offs were 52 basis points, up 2 basis points quarter-over-quarter, indicating broadly stable charge-offs and lower average loans.
Commentary from Leadership
“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,” said Chairman and CEO Bruce Van Saun. “We are executing well on our strategic initiatives, and highlight that our Private Bank reached $4.0 billion in deposits and $3.6 billion in assets under management. We continue to be comfortable with our full year guidance and medium-term targets.”
Analysis and Conclusion
Citizens Financial Group Inc (CFG, Financial) demonstrated resilience in Q2 2024, with strong fee performance and disciplined expense management. The company's strategic initiatives, particularly in the Private Bank, are yielding positive results. However, challenges such as declining net interest income and lower loan balances due to balance sheet optimization remain. Overall, the company's strong liquidity profile and capital position provide a solid foundation for future growth.
Explore the complete 8-K earnings release (here) from Citizens Financial Group Inc for further details.
