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Citizens Financial's NII Slips in 1H25: Can Fed Cuts Drive a Rebound?
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Key Takeaways
Citizens Financial's NII slipped to $2.83B in 1H25 despite Fed easing in the prior year.
Management sees 2025 NII rising 3%-5% with NIM improving to 3%.
Improving asset yields and loan growth are expected to support CFG's NII.
Citizens Financial Group’s (CFG - Free Report) net interest income (NII) has shown steady growth over the past few years, recording a compound annual growth rate (CAGR) of 5.3% for the period 2019–2024. However, in the first half of 2025, its NII slipped slightly to $2.83 billion.
The Federal Reserve’s recent policy moves are now poised to support NII growth. In September 2025, the Fed cut rates by 25 basis points to 4.00–4.25% after a nine-month pause, signaling the possibility of two more cuts before year-end. These reductions, together with continued expansion of the net interest margin (NIM) and improving yields on interest-earning assets, are expected to support NII in the coming quarters.
With Fed rate cuts, improving asset yields and loan growth, Citizens Financial appears positioned for growth in NII in the coming period. Management now expects NII to grow 3–5% in 2025 compared with the $5.6 billion reported in 2024. Also, NIM is expected to improve to 3.0% from 2.85% in 2024 during the same period.
How CFG’s Peers Are Expected to Fare in Terms of NII
Citizens Financial’s peers, such as Flagstar Financial, Inc. (FLG - Free Report) and Webster Financial Corporation (WBS - Free Report) , are also influenced by the interest rate trajectory.
Flagstar Financial has experienced volatility in NII over the past few years, with a four-year CAGR (ended 2024) of 18.3%. In the first half of 2025, the bank’s NII declined 29.8% to $829 million, reflecting lower loan balances and elevated funding costs. Management expects 2025 NII to be between $1.70 billion and $1.75 billion, supported by loan repricing, deployment into higher-yielding securities and anticipated Fed rate cuts. Flagstar Financial aims for further NII growth through 2026–2027 as funding costs decline and low-cost deposits from the Signature Bank acquisition bolster margins.
Webster Financial has maintained solid momentum in NII growth, with a five-year CAGR (ended 2024) of 19.6%. In the first half of 2025, the bank posted NII of $1.2 billion, up 8.2% year over year, supported by higher loan and deposit balances. For 2025, Webster Financial’s management projects NII of $2.47–$2.50 billion (non-FTE), underpinned by a healthy loan pipeline, growth in deposits and efforts to strengthen the securities portfolio.
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Citizens Financial's NII Slips in 1H25: Can Fed Cuts Drive a Rebound?
Key Takeaways
Citizens Financial Group’s (CFG - Free Report) net interest income (NII) has shown steady growth over the past few years, recording a compound annual growth rate (CAGR) of 5.3% for the period 2019–2024. However, in the first half of 2025, its NII slipped slightly to $2.83 billion.
The Federal Reserve’s recent policy moves are now poised to support NII growth. In September 2025, the Fed cut rates by 25 basis points to 4.00–4.25% after a nine-month pause, signaling the possibility of two more cuts before year-end. These reductions, together with continued expansion of the net interest margin (NIM) and improving yields on interest-earning assets, are expected to support NII in the coming quarters.
With Fed rate cuts, improving asset yields and loan growth, Citizens Financial appears positioned for growth in NII in the coming period. Management now expects NII to grow 3–5% in 2025 compared with the $5.6 billion reported in 2024. Also, NIM is expected to improve to 3.0% from 2.85% in 2024 during the same period.
How CFG’s Peers Are Expected to Fare in Terms of NII
Citizens Financial’s peers, such as Flagstar Financial, Inc. (FLG - Free Report) and Webster Financial Corporation (WBS - Free Report) , are also influenced by the interest rate trajectory.
Flagstar Financial has experienced volatility in NII over the past few years, with a four-year CAGR (ended 2024) of 18.3%. In the first half of 2025, the bank’s NII declined 29.8% to $829 million, reflecting lower loan balances and elevated funding costs. Management expects 2025 NII to be between $1.70 billion and $1.75 billion, supported by loan repricing, deployment into higher-yielding securities and anticipated Fed rate cuts. Flagstar Financial aims for further NII growth through 2026–2027 as funding costs decline and low-cost deposits from the Signature Bank acquisition bolster margins.
Webster Financial has maintained solid momentum in NII growth, with a five-year CAGR (ended 2024) of 19.6%. In the first half of 2025, the bank posted NII of $1.2 billion, up 8.2% year over year, supported by higher loan and deposit balances. For 2025, Webster Financial’s management projects NII of $2.47–$2.50 billion (non-FTE), underpinned by a healthy loan pipeline, growth in deposits and efforts to strengthen the securities portfolio.