We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Citizens Financial (CFG) in Q1 Earnings?
Read MoreHide Full Article
Citizens Financial Group (CFG - Free Report) is scheduled to report first-quarter 2023 earnings on Apr 19, before market open. The company's quarterly earnings and revenues are expected to have improved year over year.
In the prior quarter, this Providence, RI-based bank surpassed the Zacks Consensus Estimate on net interest income (NII) growth due to a rise in loan balances. Strong balance sheet growth was another tailwind. However, higher expenses and a rise in provisions were spoilsports.
Citizens Financial has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the surprise being 7.52%, on average.
Citizens Financial Group, Inc. Price and EPS Surprise
Loans: The lending environment have weakened in the first quarter, with the pace of loan growth across most categories slowing down as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans declined significantly in the first quarter from fourth-quarter 2022. Hence, CFG is expected to have witnessed a slowdown in loans in the quarter under review.
Nonetheless, past bank acquisitions and a strong franchise in the greater New York City and Philadelphia Metro areas are expected to have helped CFG in navigating the challenged lending environment. Management expects average loan growth to be stable to up modestly on a sequential basis, excluding auto run off. Our estimate for average loans and leases for the quarter is $157.6 billion.
NII: The Federal Reserve raised rates by 50 basis points in the quarter. The policy rate reached 4.75-5%, the highest since 2008. The increase in interest rates is likely to have a positive impact on NII of CFG.
However, due to expectations of a decline in loan balances and less number of days in the first quarter, NII is likely to have been affected on a sequential basis. Management expects NII to be down 2% on a sequential basis.
The Zacks Consensus Estimate of $1.65 billion for NII indicates a 2.71% decrease from that reported in the prior quarter. Our estimate for the metric is $1.7 billion.
Fee Income: Trust and investment services fees are likely to have declined on the back of lower asset values. The consensus mark is pegged at $62 million, indicating a 1.6% increase from the prior-quarter’s reported figure. Our estimate for the metric is $61 million.
Purchase mortgage originations are expected to have continued to decline in the first quarter, whereas refinancing originations are likely to have been stable. Also, mortgage rates have been almost stable, with the rate on the 30-year fixed mortgage reaching 6.32% in March. The rates have jumped from around 3% in the prior-year quarter.
The climb in mortgage rates has taken a toll on the origination market. These factors are expected to have lowered Citizens Financial’s mortgage banking fees in the to-be-reported quarter. The consensus estimate is pegged at $54 million, indicating no change on a sequential basis. Our estimate for the metric is $64 million.
The company is expected to have been the initial beneficiaries of flight-to safety deposit flows resulting from the Silicon Valley Bank collapse. Hence, deposit balance is likely to have increased in the quarter. However, service charge and fee revenues are expected to have declined due to the impacts of the elimination of non-sufficient funds.
The macro environment for deal-making is expected to have deteriorated in first-quarter 2023 amid uncertainty surrounding economy and the banking industry. Hence it is expected that the M&A activities will be low. Therefore, CFG’s capital market fees are likely to have declined in the to-be-reported quarter.
Nonetheless, past acquisitions to enhance its advisory competencies are anticipated to have aided the company amid industry headwinds.
Per management, non-interest income is anticipated to be down 2-4% due to seasonality on a sequential basis. The consensus estimate is pegged at $492 million, suggesting a 2.6% sequential decrease. Our estimate for the metric is $492 million.
Expenses: Despite its TOP 8 efficiency initiatives, Citizens Financial’s expenses are expected to have flared up on investments in newer technologies and building fee income capabilities organically.
Management expects underlying non-interest expenses to be up 3-4% on a sequential basis. Our estimate for the metric is $1.3 billion.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for CFG this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat which is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Citizens Financial is -0.27%.
The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.11 and has moved marginally downward over the past week, reflecting bearish sentiments of analysts. However, the consensus mark of $2.14 billion for first-quarter revenues indicates a 30.25% year-over-year rise.
Stocks Worth a Look
The Bank of New York Mellon (BK - Free Report) and Commerce Bancshares (CBSH - Free Report) are a few stocks, which you may want to consider, as these have the right combination of elements to post earnings beat in their upcoming releases, per our model.
The Bank of New York Mellon (BK - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 18. BK carries a Zacks Rank #3 at present and has an Earnings ESP of +2.29%.
Commerce Bancshares (CBSH - Free Report) is slated to report first-quarter 2023 results on Apr 18. CBSH carries a Zacks Rank #3 at present and has an Earnings ESP of +2.46%.
Image: Shutterstock
What's in Store for Citizens Financial (CFG) in Q1 Earnings?
Citizens Financial Group (CFG - Free Report) is scheduled to report first-quarter 2023 earnings on Apr 19, before market open. The company's quarterly earnings and revenues are expected to have improved year over year.
In the prior quarter, this Providence, RI-based bank surpassed the Zacks Consensus Estimate on net interest income (NII) growth due to a rise in loan balances. Strong balance sheet growth was another tailwind. However, higher expenses and a rise in provisions were spoilsports.
Citizens Financial has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the surprise being 7.52%, on average.
Citizens Financial Group, Inc. Price and EPS Surprise
Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote.
Factors at Play
Loans: The lending environment have weakened in the first quarter, with the pace of loan growth across most categories slowing down as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans declined significantly in the first quarter from fourth-quarter 2022. Hence, CFG is expected to have witnessed a slowdown in loans in the quarter under review.
Nonetheless, past bank acquisitions and a strong franchise in the greater New York City and Philadelphia Metro areas are expected to have helped CFG in navigating the challenged lending environment. Management expects average loan growth to be stable to up modestly on a sequential basis, excluding auto run off. Our estimate for average loans and leases for the quarter is $157.6 billion.
NII: The Federal Reserve raised rates by 50 basis points in the quarter. The policy rate reached 4.75-5%, the highest since 2008. The increase in interest rates is likely to have a positive impact on NII of CFG.
However, due to expectations of a decline in loan balances and less number of days in the first quarter, NII is likely to have been affected on a sequential basis. Management expects NII to be down 2% on a sequential basis.
The Zacks Consensus Estimate of $1.65 billion for NII indicates a 2.71% decrease from that reported in the prior quarter. Our estimate for the metric is $1.7 billion.
Fee Income: Trust and investment services fees are likely to have declined on the back of lower asset values. The consensus mark is pegged at $62 million, indicating a 1.6% increase from the prior-quarter’s reported figure. Our estimate for the metric is $61 million.
Purchase mortgage originations are expected to have continued to decline in the first quarter, whereas refinancing originations are likely to have been stable. Also, mortgage rates have been almost stable, with the rate on the 30-year fixed mortgage reaching 6.32% in March. The rates have jumped from around 3% in the prior-year quarter.
The climb in mortgage rates has taken a toll on the origination market. These factors are expected to have lowered Citizens Financial’s mortgage banking fees in the to-be-reported quarter. The consensus estimate is pegged at $54 million, indicating no change on a sequential basis. Our estimate for the metric is $64 million.
The company is expected to have been the initial beneficiaries of flight-to safety deposit flows resulting from the Silicon Valley Bank collapse. Hence, deposit balance is likely to have increased in the quarter. However, service charge and fee revenues are expected to have declined due to the impacts of the elimination of non-sufficient funds.
The macro environment for deal-making is expected to have deteriorated in first-quarter 2023 amid uncertainty surrounding economy and the banking industry. Hence it is expected that the M&A activities will be low. Therefore, CFG’s capital market fees are likely to have declined in the to-be-reported quarter.
Nonetheless, past acquisitions to enhance its advisory competencies are anticipated to have aided the company amid industry headwinds.
Per management, non-interest income is anticipated to be down 2-4% due to seasonality on a sequential basis. The consensus estimate is pegged at $492 million, suggesting a 2.6% sequential decrease. Our estimate for the metric is $492 million.
Expenses: Despite its TOP 8 efficiency initiatives, Citizens Financial’s expenses are expected to have flared up on investments in newer technologies and building fee income capabilities organically.
Management expects underlying non-interest expenses to be up 3-4% on a sequential basis. Our estimate for the metric is $1.3 billion.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for CFG this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat which is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Citizens Financial is -0.27%.
Zacks Rank: Citizens Financial currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.11 and has moved marginally downward over the past week, reflecting bearish sentiments of analysts. However, the consensus mark of $2.14 billion for first-quarter revenues indicates a 30.25% year-over-year rise.
Stocks Worth a Look
The Bank of New York Mellon (BK - Free Report) and Commerce Bancshares (CBSH - Free Report) are a few stocks, which you may want to consider, as these have the right combination of elements to post earnings beat in their upcoming releases, per our model.
The Bank of New York Mellon (BK - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 18. BK carries a Zacks Rank #3 at present and has an Earnings ESP of +2.29%.
Commerce Bancshares (CBSH - Free Report) is slated to report first-quarter 2023 results on Apr 18. CBSH carries a Zacks Rank #3 at present and has an Earnings ESP of +2.46%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.