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Citizens Financial (CFG) Q4 Earnings Miss, NII Declines
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Citizens Financial Group (CFG - Free Report) has reported fourth-quarter 2023 earnings per share of 34 cents, missing the Zacks Consensus Estimate of 60 cents. The bottom line also declined from $1.25 in the year-ago quarter.
Results were adversely impacted by lower net interest income (NII), and a rise in provisions and operating expenses. Non-interest income also witnessed a decline in the quarter.
Net income was $189 million, down from $653 million in the prior-year quarter.
In 2023, underlying earnings of $3.13 per share missed the consensus estimate of $3.37 and declined 23.7% year over year. Net income was $1.61 billion, down 22.4% from the prior year.
Revenues Fall, Loans Decline
Total revenues in the fourth quarter were $1.99 billion, which missed the consensus estimate of $2 billion. Also, the top line moved down 9.6% year over year.
In 2023, total revenues came in at $8.22 billion, which missed the Zacks Consensus Estimate of $8.24 billion. Nonetheless, the top line jumped 2.5% year over year.
Citizens Financial’s NII decreased 12.2% year over year to $1.49 billion due to a lower net interest margin and a decline in average interest-earning assets. Our estimate for NII was the same as the reported number.
The net interest margin (NIM) shrunk 39 basis points to 2.91% on the back of increased funding costs partially offset by higher yields on interest-earning assets. Our estimate for NIM was 2.99%.
The non-interest income decreased 1% to $500 million. A decline in service charges and fees, capital market fees and other income largely led to the fall.
Non-interest expenses rose 30% to $1.61 billion. Our estimate for the metric was $1.34 billion.
The efficiency ratio of 81.1% in the fourth quarter increased from 56.4% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, period-end total loans and leases balances were $145.96 billion, down 3% sequentially. Total deposits decreased marginally to $177.34 billion.
Credit Quality Worsens
As of Dec 31, 2023, CFG’s provision for credit losses was $171 million compared with $132 million in the year-ago quarter. The allowance for credit losses remained stable at $2.32 billion.
Further, net charge-offs jumped 94% to $171 million. Our estimate for the metric was $170 million. Non-accrual loans and leases were up 5% to $1.36 billion.
Capital Position Improves
As of Dec 31, 2023, the tier-1 leverage ratio was 9.3%, flat from the prior-year quarter.
The common equity tier-1 capital ratio was 10.6% compared with 10% at the end of the prior-year quarter. Further, the total capital ratio was 13.7%, up from 12.8% in the prior-year quarter.
Share Repurchase Update
During the quarter, the company did not repurchase any shares.
Our View
Citizens Financial’s results highlight a weak quarter amid the current macroeconomic backdrop. Any further rise in expenses and decline in NII and fee income is likely to affect its financials. Nonetheless, inorganic growth initiatives should drive its momentum back.
Citizens Financial Group, Inc. Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded loss per share of $1.16. It registered earnings of $1.16 a year ago.
It witnessed growth in total loans and deposits in the reported quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, a decline in NII, worsening credit quality and a dip in loan balances were the undermining factors for WFC.
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Citizens Financial (CFG) Q4 Earnings Miss, NII Declines
Citizens Financial Group (CFG - Free Report) has reported fourth-quarter 2023 earnings per share of 34 cents, missing the Zacks Consensus Estimate of 60 cents. The bottom line also declined from $1.25 in the year-ago quarter.
Results were adversely impacted by lower net interest income (NII), and a rise in provisions and operating expenses. Non-interest income also witnessed a decline in the quarter.
Net income was $189 million, down from $653 million in the prior-year quarter.
In 2023, underlying earnings of $3.13 per share missed the consensus estimate of $3.37 and declined 23.7% year over year. Net income was $1.61 billion, down 22.4% from the prior year.
Revenues Fall, Loans Decline
Total revenues in the fourth quarter were $1.99 billion, which missed the consensus estimate of $2 billion. Also, the top line moved down 9.6% year over year.
In 2023, total revenues came in at $8.22 billion, which missed the Zacks Consensus Estimate of $8.24 billion. Nonetheless, the top line jumped 2.5% year over year.
Citizens Financial’s NII decreased 12.2% year over year to $1.49 billion due to a lower net interest margin and a decline in average interest-earning assets. Our estimate for NII was the same as the reported number.
The net interest margin (NIM) shrunk 39 basis points to 2.91% on the back of increased funding costs partially offset by higher yields on interest-earning assets. Our estimate for NIM was 2.99%.
The non-interest income decreased 1% to $500 million. A decline in service charges and fees, capital market fees and other income largely led to the fall.
Non-interest expenses rose 30% to $1.61 billion. Our estimate for the metric was $1.34 billion.
The efficiency ratio of 81.1% in the fourth quarter increased from 56.4% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Dec 31, 2023, period-end total loans and leases balances were $145.96 billion, down 3% sequentially. Total deposits decreased marginally to $177.34 billion.
Credit Quality Worsens
As of Dec 31, 2023, CFG’s provision for credit losses was $171 million compared with $132 million in the year-ago quarter. The allowance for credit losses remained stable at $2.32 billion.
Further, net charge-offs jumped 94% to $171 million. Our estimate for the metric was $170 million. Non-accrual loans and leases were up 5% to $1.36 billion.
Capital Position Improves
As of Dec 31, 2023, the tier-1 leverage ratio was 9.3%, flat from the prior-year quarter.
The common equity tier-1 capital ratio was 10.6% compared with 10% at the end of the prior-year quarter. Further, the total capital ratio was 13.7%, up from 12.8% in the prior-year quarter.
Share Repurchase Update
During the quarter, the company did not repurchase any shares.
Our View
Citizens Financial’s results highlight a weak quarter amid the current macroeconomic backdrop. Any further rise in expenses and decline in NII and fee income is likely to affect its financials. Nonetheless, inorganic growth initiatives should drive its momentum back.
Citizens Financial Group, Inc. Price, Consensus and EPS Surprise
Currently, Citizens Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impact of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impact of notable items in the quarter, C recorded loss per share of $1.16. It registered earnings of $1.16 a year ago.
It witnessed growth in total loans and deposits in the reported quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
Results have benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, a decline in NII, worsening credit quality and a dip in loan balances were the undermining factors for WFC.