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What's in Store for Citizens Financial (CFG) in Q4 Earnings?
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Citizens Financial Group (CFG - Free Report) is scheduled to report its fourth-quarter and full-year 2023 results on Jan 17, before the opening bell. The company is expected to have witnessed year-over-year decline in quarterly revenues and earnings.
In third-quarter 2023, this Providence, RI-based bank missed the Zacks Consensus Estimate on lower net interest income (NII), a rise in provisions and operating expenses. Non-interest income also witnessed a decline in the quarter. Nonetheless, a rise in deposit balance acted as a tailwind.
Citizens Financial has an unimpressive earnings surprise history. The company’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, the negative surprise being 7.34%, on average.
Citizens Financial Group, Inc. Price and EPS Surprise
In November, CFG launched Citizens Private Bank. With this, the company aims to continue growth in its wealth management offerings, improve capabilities in the high-net-worth segment and expand into key markets.
The Citizens Private Bank offers high-touch client services to high-net-worth individuals, families and businesses. These include private family foundations, non-profit, multifamily and commercial real estate, life sciences, private equity and venture capital firms.
It also announced the opening of six private banking offices during the remaining part of 2023 and throughout 2024. Initially, the offices will be opened in New York City, Boston and Palm Beach, and further in various locations of San Francisco Bay Area.
Factors at Play
Loans: Per Fed’s latest data, demand for commercial and industrial loans weakened in the first two months of the quarter under review from third-quarter 2023 levels. Nevertheless, demand for consumer, as well as commercial real estate loans showed signs of improvement in November from third-quarter 2023 levels. Hence, we believe loan growth for Citizens Financial is likely to have been modest.
This is expected to have a positive impact on the company’s average interest earning assets during the quarter. In fact, the Zacks Consensus Estimate for average interest-earning assets is pegged at $201.2 billion, suggesting nearly 1% increase from the prior quarter’s reported figure.
NII: Federal Reserve paused interest rate hikes during fourth-quarter 2023. Yet, interest rates remained at a 22-year high of 5.25-5.5%. Though a modest lending environment is likely to offer some support, NII growth and margins in the fourth quarter are likely to have been affected by an increase in funding costs given the high interest rates.
Management expects NII to be down nearly 2% from $1.52 billion in the third quarter.
The Zacks Consensus Estimate for NII is pegged at $1.49 billion, suggesting a 2.3% decrease from the prior quarter. Our estimate is in line with the Zacks Consensus Estimate.
Fee Income: In the quarter under review, mortgage rates started to decrease, with the rate on a 30-year fixed mortgage declining to 6.62% as of Dec 31, 2023, from 7.31% recorded at the beginning of the quarter. Though mortgage rates declined, they remain sufficiently high, keeping home buyers on the sidelines. This is likely to have led to a smaller origination market, both purchase and refinancing, compared with the prior quarter.
These factors are expected to have lowered Citizens Financial’s mortgage banking fees in the to-be-reported quarter. The Zacks Consensus Estimate is pegged at $63 million, indicating a 8.7% decrease from the prior quarter’s reported figure. Our estimate of $61 million indicates a decline of 11.6% sequentially.
Though muted volatility during fourth-quarter 2023 has lead to subdued client activity across all asset classes, equity market performance is optimistic. This is likely to have boosted the company’s trust and investment services fees. The consensus mark is pegged at $64 million, indicating a 1.6% increase from the prior quarter’s reported figure. Our estimate for the metric is pegged at $64.3 million.
Global deal making witnessed a slight rebound in the fourth quarter, and green shoots were observed in capital markets and issuance activities. Notably, at the Goldman Sachs’ U.S. Financial Services Conferenceheld in early December, bank executives stated that global deal-making conditions have started to improve. The major factor driving a better picture was the stabilizing interest rate environment.
Also, there have been quite a few initial public offerings during the quarter to be reported. These are likely to have positively impacted CFG’s capital market feesduring the quarter. The Zacks Consensus Estimate for capital market fees is pegged at $84 million, indicating a sequential rise of 25.4%. We estimate the metric to reach $84.1 million.
Citizens Financial’s efforts to enhance deposit balances on the back of past strategic acquisitions are likely to have aided service charge and fee revenues in the quarter under review to some extent. However, given the high-interest rate environment, customers have been moving their investments from deposits to alternative higher yielding assets, affecting the metric. The Zacks Consensus Estimate for the same is pegged at $105 million, indicating to remain flat from the prior quarter’s reported level. Our estimate for the metric is pegged at $104.8 million.
Further, the high interest rates are likely to have increased transactions and spending volumes, thereby supporting CFG’s card fees in the quarter to be reported. The consensus mark is pegged at $76 million, indicating a sequential rise of 2.7%. We estimate the metric to reach $75.7 million.
Per management, non-interest income is anticipated to be up approximately 3-4% from $492 million in third-quarter 2023. Further, the consensus estimate is pegged at $508 million, suggesting a 3.3% sequential increase. Our estimate for the metric is pegged at $506.9 million.
Expenses: Despite its ongoing TOP 8 efficiency measures and plans to launch its TOP 9 program with a major cost reduction initiative, Citizens Financial’s expenses are expected to have flared up on opening of private banking offices, franchise expansion nationally, as well as investments in newer technological advancements. This is likely to have increased costs during the quarter.
Nonetheless, management projects underlying non-interest expenses to be relatively stable from $1.27 billion in third-quarter 2023. We estimate the metric to reach $1.36 billion.
Earnings Whispers
Citizens Financial does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
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 -8.88%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for fourth-quarter earnings has been revised 13.8% downward to 56 cents per share over the past month. This suggests a 55.2% decrease from a year ago. The consensus estimate for quarterly revenues of $2 billion indicates a 9.2% decline from the prior-year quarter.
The consensus estimate for full-year 2023 earnings is pegged at $3.34, declining 2.6% over the past month. Also, it suggests a decrease of 18.5% from the prior year. Nonetheless, the consensus estimate for annual revenues of $8.23 billion indicates 2.6% growth from the prior-year quarter.
Stocks That Warrant a Look
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.
Northern Trust Corporation (NTRS - Free Report) is slated to report fourth-quarter and full-year 2023 results on Jan 18. It has an Earnings ESP of +4.29% and carries a Zacks Rank #3, at present.
Over the past week, the Zacks Consensus Estimate for NTRS’ quarterly earnings per share has moved marginally north to $1.25.
First Horizon Corporation (FHN - Free Report) is scheduled to release fourth-quarter and full-year 2023 earnings on Jan 18. The company has an Earnings ESP of +4.17% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for FHN’s quarterly earnings has remained unchanged at 31 cents per share over the past 60 days.
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What's in Store for Citizens Financial (CFG) in Q4 Earnings?
Citizens Financial Group (CFG - Free Report) is scheduled to report its fourth-quarter and full-year 2023 results on Jan 17, before the opening bell. The company is expected to have witnessed year-over-year decline in quarterly revenues and earnings.
In third-quarter 2023, this Providence, RI-based bank missed the Zacks Consensus Estimate on lower net interest income (NII), a rise in provisions and operating expenses. Non-interest income also witnessed a decline in the quarter. Nonetheless, a rise in deposit balance acted as a tailwind.
Citizens Financial has an unimpressive earnings surprise history. The company’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, the negative surprise being 7.34%, on average.
Citizens Financial Group, Inc. Price and EPS Surprise
Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote
Key Developments During the Quarter
In November, CFG launched Citizens Private Bank. With this, the company aims to continue growth in its wealth management offerings, improve capabilities in the high-net-worth segment and expand into key markets.
The Citizens Private Bank offers high-touch client services to high-net-worth individuals, families and businesses. These include private family foundations, non-profit, multifamily and commercial real estate, life sciences, private equity and venture capital firms.
It also announced the opening of six private banking offices during the remaining part of 2023 and throughout 2024. Initially, the offices will be opened in New York City, Boston and Palm Beach, and further in various locations of San Francisco Bay Area.
Factors at Play
Loans: Per Fed’s latest data, demand for commercial and industrial loans weakened in the first two months of the quarter under review from third-quarter 2023 levels. Nevertheless, demand for consumer, as well as commercial real estate loans showed signs of improvement in November from third-quarter 2023 levels. Hence, we believe loan growth for Citizens Financial is likely to have been modest.
This is expected to have a positive impact on the company’s average interest earning assets during the quarter. In fact, the Zacks Consensus Estimate for average interest-earning assets is pegged at $201.2 billion, suggesting nearly 1% increase from the prior quarter’s reported figure.
NII: Federal Reserve paused interest rate hikes during fourth-quarter 2023. Yet, interest rates remained at a 22-year high of 5.25-5.5%. Though a modest lending environment is likely to offer some support, NII growth and margins in the fourth quarter are likely to have been affected by an increase in funding costs given the high interest rates.
Management expects NII to be down nearly 2% from $1.52 billion in the third quarter.
The Zacks Consensus Estimate for NII is pegged at $1.49 billion, suggesting a 2.3% decrease from the prior quarter. Our estimate is in line with the Zacks Consensus Estimate.
Fee Income: In the quarter under review, mortgage rates started to decrease, with the rate on a 30-year fixed mortgage declining to 6.62% as of Dec 31, 2023, from 7.31% recorded at the beginning of the quarter. Though mortgage rates declined, they remain sufficiently high, keeping home buyers on the sidelines. This is likely to have led to a smaller origination market, both purchase and refinancing, compared with the prior quarter.
These factors are expected to have lowered Citizens Financial’s mortgage banking fees in the to-be-reported quarter. The Zacks Consensus Estimate is pegged at $63 million, indicating a 8.7% decrease from the prior quarter’s reported figure. Our estimate of $61 million indicates a decline of 11.6% sequentially.
Though muted volatility during fourth-quarter 2023 has lead to subdued client activity across all asset classes, equity market performance is optimistic. This is likely to have boosted the company’s trust and investment services fees. The consensus mark is pegged at $64 million, indicating a 1.6% increase from the prior quarter’s reported figure. Our estimate for the metric is pegged at $64.3 million.
Global deal making witnessed a slight rebound in the fourth quarter, and green shoots were observed in capital markets and issuance activities. Notably, at the Goldman Sachs’ U.S. Financial Services Conferenceheld in early December, bank executives stated that global deal-making conditions have started to improve. The major factor driving a better picture was the stabilizing interest rate environment.
Also, there have been quite a few initial public offerings during the quarter to be reported. These are likely to have positively impacted CFG’s capital market feesduring the quarter. The Zacks Consensus Estimate for capital market fees is pegged at $84 million, indicating a sequential rise of 25.4%. We estimate the metric to reach $84.1 million.
Citizens Financial’s efforts to enhance deposit balances on the back of past strategic acquisitions are likely to have aided service charge and fee revenues in the quarter under review to some extent. However, given the high-interest rate environment, customers have been moving their investments from deposits to alternative higher yielding assets, affecting the metric. The Zacks Consensus Estimate for the same is pegged at $105 million, indicating to remain flat from the prior quarter’s reported level. Our estimate for the metric is pegged at $104.8 million.
Further, the high interest rates are likely to have increased transactions and spending volumes, thereby supporting CFG’s card fees in the quarter to be reported. The consensus mark is pegged at $76 million, indicating a sequential rise of 2.7%. We estimate the metric to reach $75.7 million.
Per management, non-interest income is anticipated to be up approximately 3-4% from $492 million in third-quarter 2023. Further, the consensus estimate is pegged at $508 million, suggesting a 3.3% sequential increase. Our estimate for the metric is pegged at $506.9 million.
Expenses: Despite its ongoing TOP 8 efficiency measures and plans to launch its TOP 9 program with a major cost reduction initiative, Citizens Financial’s expenses are expected to have flared up on opening of private banking offices, franchise expansion nationally, as well as investments in newer technological advancements. This is likely to have increased costs during the quarter.
Nonetheless, management projects underlying non-interest expenses to be relatively stable from $1.27 billion in third-quarter 2023. We estimate the metric to reach $1.36 billion.
Earnings Whispers
Citizens Financial does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat this time around.
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 -8.88%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for fourth-quarter earnings has been revised 13.8% downward to 56 cents per share over the past month. This suggests a 55.2% decrease from a year ago. The consensus estimate for quarterly revenues of $2 billion indicates a 9.2% decline from the prior-year quarter.
The consensus estimate for full-year 2023 earnings is pegged at $3.34, declining 2.6% over the past month. Also, it suggests a decrease of 18.5% from the prior year. Nonetheless, the consensus estimate for annual revenues of $8.23 billion indicates 2.6% growth from the prior-year quarter.
Stocks That Warrant a Look
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.
Northern Trust Corporation (NTRS - Free Report) is slated to report fourth-quarter and full-year 2023 results on Jan 18. It has an Earnings ESP of +4.29% and carries a Zacks Rank #3, at present.
Over the past week, the Zacks Consensus Estimate for NTRS’ quarterly earnings per share has moved marginally north to $1.25.
First Horizon Corporation (FHN - Free Report) is scheduled to release fourth-quarter and full-year 2023 earnings on Jan 18. The company has an Earnings ESP of +4.17% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for FHN’s quarterly earnings has remained unchanged at 31 cents per share over the past 60 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.