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Citizens Financial Announces New Buyback Plan: Is it Worth Watching?
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Key Takeaways
CFG raised its share repurchase authorization by $1.2B, bringing the total to $1.5B.
The move highlights management's confidence in CFG's financial strength and growth strategy.
CFG also aims to grow via acquisitions, cost-cutting programs, and private banking expansion.
Citizens Financial Group (CFG - Free Report) is reinforcing its shareholder-focused strategy that highlights confidence in its long-term performance.
Last week, the company announced an increase in its common share repurchase authorization to $1.5 billion, an increase of $1.2 billion over the $300 million capacity previously authorized in June 2024. This move, approved by the board of directors, signals management’s confidence in the company’s financial strength and long-term strategy.
John F. Woods, vice chair and CFO of Citizens Financial, stated that, “The authorization reflects confidence in our ability to deliver strong financial performance, support our customers, invest across our businesses and drive forward our organic growth initiatives while delivering attractive capital returns to shareholders.”
Apart from share repurchase plan, the company regularly pays dividends. Over the last five years, the company increased its quarterly dividend twice. It has a payout ratio of 53%. Considering yesterday’s closing price of $40.45, it has a dividend yield of 4.15%. Comparatively, CFG’s peers, Fifth Third Bancorp (FITB - Free Report) and Comerica Incorporated (CMA - Free Report) also pays regular dividends. The dividend yield of Fifth Third stands at 3.88%, while Comerica has a dividend yield of 5.16%.
Citizens Financial Group, Inc. Dividend Yield (TTM)
Citizens Financial enjoys a strong balance sheet position. As of March 31, 2025, the company had total long-term borrowed funds of $12.3 billion, while it had $47 million of short-term debt. The total available liquidity (comprising cash and due from banks, interest-bearing cash and due from banks, and interest-bearing deposits in banks) was $12.2 billion. Its Common Equity Tier 1 ratio stood at 10.6%, while the total capital ratio was 13.9% as of March 31, 2025.
Thus, the company’s solid capital position and liquidity profile afford it flexibility to invest across businesses while enhancing capital returns through dividends and repurchases.
Given an impressive capital distribution plan, many investors must wonder whether it is the right time to invest in CFG stock. Let us delve deeper and analyze other factors at play to decide its investment worthiness.
Other Catalysts Supporting CFG
Inorganic Growth Efforts: CFG has actively pursued acquisitions to expand its geographic footprint and product capabilities. Notable deals include the buyouts of Investors Bancorp, HSBC’s East Coast branches, and College Raptor Inc., which have strengthened its presence in the New York City and Philadelphia metro areas. These buyouts enable the company to expand its product and fee-generation capabilities, as well as geographic reach.
Improving Operational Efficiency:Citizens Financial’s focus on executing a series of revenue and efficiency initiatives led to the introduction of the “Tapping Our Potential” (TOP) program in late 2014. On the efficiency front, the bank’s long-running TOP program has delivered consistent cost savings, with TOP 9 achieving $150 million in pre-tax run-rate benefits in 2024. The upcoming TOP 10 initiative targets an additional $100 million in savings by year-end 2025, driven by automation and AI integration.
Strong Loan and Deposit Base: The company maintains a healthy funding profile, with loans and leases and total deposits recording compound annual growth rates (CAGR) of 3.1% and 4.4%, respectively, over the 2020–2024 period. Although deposits rose in early 2025, supported by enhanced gathering capabilities and recent acquisitions, loan balances dipped during the first quarter, and average loans are expected to decline 2–3% in 2025 from the 2024 level of $139.2 billion. However, management remains optimistic that its relationship-driven lending model and focus on attractive risk-adjusted returns will help sustain a healthy loan pipeline. Looking ahead, Citizens Financial anticipates loans and deposits to grow at a three-year CAGR of 4.4% and 2.5%, respectively, through 2027.
Revenue Strength: Organic growth is Citizens Financial’s key strength, as reflected by its rising revenue trend. The company’s total revenues witnessed a CAGR of 3% over the last four years (2020-2024). Though net interest income (NII) recorded a CAGR of 5.3% during the same time frame, non-interest income witnessed a negative CAGR of 1.8% in the last four years (2020-2024). In the first quarter of 2025, total revenues declined slightly year over year due to lower NII, while strength in non-interest income offset the decline to some extent.
Nonetheless, an increasing strength in fee-based business will support non-interest income growth in the upcoming period. Given its BSO plan, decent loan growth and the Fed’s rate cut, NII is likely to increase in the upcoming period. Thus, these will benefit the company’s top-line growth in the upcoming period.
For 2025, management expects NII to grow 3–5% from the 2024 level, supported by a rebound in net interest margin to 3%. Non-interest income is projected to rise 8–10%, driven by continued gains in service charges, card fees, and mortgage banking.
Headwinds Faced by CFG
Expense Pressures: The company continues to face elevated expense levels, largely driven by investments in private banking expansion, digital infrastructure, and franchise growth. Non-interest expenses recorded a CAGR of 18.4% over the 2020–2024 period. While the first quarter of 2025 saw a modest decline in reported expenses, underlying non-interest expenses rose 3% year over year. For 2025, management projects a 4% increase in adjusted non-interest expenses from the 2024 base of $5.1 billion.
Citizens Financial Group, Inc. Total Expenses (TTM)
Loan Concentration Risk: The loan portfolio of Citizens Financial contains a high amount of commercial loans (50.2% of total loans and leases as of March 31, 2025). The current rapidly changing macroeconomic backdrop may put some strain on commercial lending. Moreover, in case of any economic downturn, the credit quality of the loan category may deteriorate. Thus, the lack of loan portfolio diversification is likely to hurt the company’s financials if the economic situation worsens.
CFG's Price Performance & Valuation Analysis
CFG shares have rallied 16.3% in the past year compared with the industry’s growth of 11.1%. Meanwhile, its peers, Comerica and Fifth Third Bancorp, have risen 16.3% and 5.9% respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Citizens Financial trades at a forward price-to-earnings (P/E) ratio of 10.76X compared with the industry’s 10.1X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Fifth Third trades at a higher forward P/E of 10.83X. Similarly, Comerica commands a forward P/E of 14.14X.
Is CFG Stock Worth Considering?
Citizens Financial’s elevated expense levels and reliance on commercial lending remain near-term challenges, potentially impacting its performance in the near term.
Nonetheless, the company's ongoing efficiency initiatives and strategic inorganic growth moves provide a solid foundation for financial growth in the upcoming period. Additionally, a consistent upward trend in revenue and a strong liquidity position reinforce confidence in CFG’s ability to support future capital return plans.
Hence, CFG presents favorable long-term prospects. Investors may consider keeping CFG stock on their radar and wait for a more attractive entry point to optimize return potential.
Image: Shutterstock
Citizens Financial Announces New Buyback Plan: Is it Worth Watching?
Key Takeaways
Citizens Financial Group (CFG - Free Report) is reinforcing its shareholder-focused strategy that highlights confidence in its long-term performance.
Last week, the company announced an increase in its common share repurchase authorization to $1.5 billion, an increase of $1.2 billion over the $300 million capacity previously authorized in June 2024. This move, approved by the board of directors, signals management’s confidence in the company’s financial strength and long-term strategy.
John F. Woods, vice chair and CFO of Citizens Financial, stated that, “The authorization reflects confidence in our ability to deliver strong financial performance, support our customers, invest across our businesses and drive forward our organic growth initiatives while delivering attractive capital returns to shareholders.”
Apart from share repurchase plan, the company regularly pays dividends. Over the last five years, the company increased its quarterly dividend twice. It has a payout ratio of 53%. Considering yesterday’s closing price of $40.45, it has a dividend yield of 4.15%. Comparatively, CFG’s peers, Fifth Third Bancorp (FITB - Free Report) and Comerica Incorporated (CMA - Free Report) also pays regular dividends. The dividend yield of Fifth Third stands at 3.88%, while Comerica has a dividend yield of 5.16%.
Citizens Financial Group, Inc. Dividend Yield (TTM)
Citizens Financial Group, Inc. dividend-yield-ttm | Citizens Financial Group, Inc. Quote
Citizens Financial enjoys a strong balance sheet position. As of March 31, 2025, the company had total long-term borrowed funds of $12.3 billion, while it had $47 million of short-term debt. The total available liquidity (comprising cash and due from banks, interest-bearing cash and due from banks, and interest-bearing deposits in banks) was $12.2 billion. Its Common Equity Tier 1 ratio stood at 10.6%, while the total capital ratio was 13.9% as of March 31, 2025.
Thus, the company’s solid capital position and liquidity profile afford it flexibility to invest across businesses while enhancing capital returns through dividends and repurchases.
Given an impressive capital distribution plan, many investors must wonder whether it is the right time to invest in CFG stock. Let us delve deeper and analyze other factors at play to decide its investment worthiness.
Other Catalysts Supporting CFG
Inorganic Growth Efforts: CFG has actively pursued acquisitions to expand its geographic footprint and product capabilities. Notable deals include the buyouts of Investors Bancorp, HSBC’s East Coast branches, and College Raptor Inc., which have strengthened its presence in the New York City and Philadelphia metro areas. These buyouts enable the company to expand its product and fee-generation capabilities, as well as geographic reach.
Improving Operational Efficiency:Citizens Financial’s focus on executing a series of revenue and efficiency initiatives led to the introduction of the “Tapping Our Potential” (TOP) program in late 2014. On the efficiency front, the bank’s long-running TOP program has delivered consistent cost savings, with TOP 9 achieving $150 million in pre-tax run-rate benefits in 2024. The upcoming TOP 10 initiative targets an additional $100 million in savings by year-end 2025, driven by automation and AI integration.
Strong Loan and Deposit Base: The company maintains a healthy funding profile, with loans and leases and total deposits recording compound annual growth rates (CAGR) of 3.1% and 4.4%, respectively, over the 2020–2024 period. Although deposits rose in early 2025, supported by enhanced gathering capabilities and recent acquisitions, loan balances dipped during the first quarter, and average loans are expected to decline 2–3% in 2025 from the 2024 level of $139.2 billion. However, management remains optimistic that its relationship-driven lending model and focus on attractive risk-adjusted returns will help sustain a healthy loan pipeline. Looking ahead, Citizens Financial anticipates loans and deposits to grow at a three-year CAGR of 4.4% and 2.5%, respectively, through 2027.
Revenue Strength: Organic growth is Citizens Financial’s key strength, as reflected by its rising revenue trend. The company’s total revenues witnessed a CAGR of 3% over the last four years (2020-2024). Though net interest income (NII) recorded a CAGR of 5.3% during the same time frame, non-interest income witnessed a negative CAGR of 1.8% in the last four years (2020-2024). In the first quarter of 2025, total revenues declined slightly year over year due to lower NII, while strength in non-interest income offset the decline to some extent.
Nonetheless, an increasing strength in fee-based business will support non-interest income growth in the upcoming period. Given its BSO plan, decent loan growth and the Fed’s rate cut, NII is likely to increase in the upcoming period. Thus, these will benefit the company’s top-line growth in the upcoming period.
For 2025, management expects NII to grow 3–5% from the 2024 level, supported by a rebound in net interest margin to 3%. Non-interest income is projected to rise 8–10%, driven by continued gains in service charges, card fees, and mortgage banking.
Headwinds Faced by CFG
Expense Pressures: The company continues to face elevated expense levels, largely driven by investments in private banking expansion, digital infrastructure, and franchise growth. Non-interest expenses recorded a CAGR of 18.4% over the 2020–2024 period. While the first quarter of 2025 saw a modest decline in reported expenses, underlying non-interest expenses rose 3% year over year. For 2025, management projects a 4% increase in adjusted non-interest expenses from the 2024 base of $5.1 billion.
Citizens Financial Group, Inc. Total Expenses (TTM)
Citizens Financial Group, Inc. total-expenses-ttm | Citizens Financial Group, Inc. Quote
Loan Concentration Risk: The loan portfolio of Citizens Financial contains a high amount of commercial loans (50.2% of total loans and leases as of March 31, 2025). The current rapidly changing macroeconomic backdrop may put some strain on commercial lending. Moreover, in case of any economic downturn, the credit quality of the loan category may deteriorate. Thus, the lack of loan portfolio diversification is likely to hurt the company’s financials if the economic situation worsens.
CFG's Price Performance & Valuation Analysis
CFG shares have rallied 16.3% in the past year compared with the industry’s growth of 11.1%. Meanwhile, its peers, Comerica and Fifth Third Bancorp, have risen 16.3% and 5.9% respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Citizens Financial trades at a forward price-to-earnings (P/E) ratio of 10.76X compared with the industry’s 10.1X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Fifth Third trades at a higher forward P/E of 10.83X. Similarly, Comerica commands a forward P/E of 14.14X.
Is CFG Stock Worth Considering?
Citizens Financial’s elevated expense levels and reliance on commercial lending remain near-term challenges, potentially impacting its performance in the near term.
Nonetheless, the company's ongoing efficiency initiatives and strategic inorganic growth moves provide a solid foundation for financial growth in the upcoming period. Additionally, a consistent upward trend in revenue and a strong liquidity position reinforce confidence in CFG’s ability to support future capital return plans.
Hence, CFG presents favorable long-term prospects. Investors may consider keeping CFG stock on their radar and wait for a more attractive entry point to optimize return potential.
CFG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.