Rise in NII, Fee Income to Support Citizens Financial's Q2 Earnings

Citizens Financial Group, Inc. CFG is scheduled to report second-quarter 2025 results on July 17, 2025, before the opening bell. The bank’s second-quarter 2025 earnings and revenues are expected to have increased from the year-ago quarter’s reported level.

In the first quarter, CFG witnessed a rise in non-interest income, along with reduced expenses. However, lower net interest income (NII) and declining loan balances were major headwinds.

The company’s earnings missed the Zacks Consensus Estimate once, matched it once and surpassed it on two occasions. On average, the positive surprise is 0.95%.

Citizens Financial Group, Inc. Price and EPS Surprise

Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote

Factors to Influence CFG’s Q2 Earnings

NII: The Federal Reserve kept interest rates unchanged at 4.25-4.5% in the second quarter of 2025. This is likely to have supported CFG’s NII as the funding/deposit costs stabilized. 

Management expects NII to rise 3% in the second quarter of 2025 from the first quarter’s reported level.

The Zacks Consensus Estimate for NII is pegged at $1.44 billion, indicating a 3.2% rise from the prior quarter’s reported figure. Our estimate for the metric is the same as the Zacks Consensus Estimate.

Loans: Despite an uncertain macroeconomic backdrop because of Trump’s tariff plans, the overall lending scenario was impressive. Per the Federal Reserve’s latest data, demand for commercial and industrial loans and consumer loans was decent in the quarter. As a result, CFG’s lending activities are expected to have seen a modest rise in loan demand.

The Zacks Consensus Estimate for average interest-earning assets is pegged at $196.2 billion, indicating a marginal rise from the prior quarter’s reported figure. We estimate the metric to be $199.6 billion.

Non-Interest Income: Despite the Fed's interest rate cuts in 2024, mortgage rates did not fall significantly. The second quarter saw rates fluctuate, but they remained in the mid-to-upper 6% range. As such, refinancing activities and origination volumes witnessed decent improvement. Thus, Citizens Financial is likely to have seen some growth in mortgage banking fees in the quarter to be reported.

The Zacks Consensus Estimate for mortgage banking fees is pegged at $63 million, indicating a 6.6% rise from the prior quarter’s reported figure. Our estimate for the metric is pegged at $56.2 million.

The quarter witnessed heightened market volatility and client activity because of uncertainty related to Trump’s tariff plans. Also, the volatility was high in equity markets. Hence, Citizens Financial's trust and investment services fees are likely to have recorded some improvements in the quarter to be reported. The Zacks Consensus Estimate for trust and investment services fees is pegged at $84 million, indicating a 3.7% increase from the previous quarter’s reported figure. 

Global mergers and acquisitions in the second quarter of 2025 were impressive than previously expected. Markets plunged in early April as Trump announced sweeping tariffs, which hurt business confidence. But as trade demands eased and policy direction became clearer, deal-making activities resumed in the last month of the quarter. As such, CFG’s capital markets growth is expected to have been decent. 

The Zacks Consensus Estimate for capital markets fees is pegged at $108.4 million, indicating a sequential rise of 8.4%. We estimate the metric to be $115.1 million.

The Zacks Consensus Estimate for the service charge and fee revenues is pegged at $112.4 million, indicating a rise of 3.1% from the prior quarter’s reported level. Our estimate for the metric is pegged at $105.7 million.

The Zacks Consensus Estimate for card fees is pegged at $89.5 million, indicating a 7.8% rise from the prior quarter’s reported figure. We estimate the metric to reach $93.8 million.

Management expects fee income in the second quarter to rise in the mid to high-single digits from the first-quarter 2025 reported level. Further, the Zacks Consensus Estimate for the metric is pegged at $572.8 million, indicating a 5.3% sequential fall. Our estimate for the metric is pegged at $566.1 million.

Expenses: The opening of private banking offices, franchise expansion nationally and investments in newer technological advancements are likely to have increased CFG’s expenses in the second quarter. However, its efforts to control expenses are anticipated to have offset the rise.

Management projects adjusted non-interest expenses to be broadly stable compared with the first-quarter 2025 reported level.

Asset Quality: The company is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of a higher for longer interest rate backdrop and the impacts of Trump’s tariffs on inflation.

The Zacks Consensus Estimate for non-accrual loans is pegged at $1.62 billion, indicating a sequential rise of 2.4%. Our estimate for the non-accrual loans is pegged at $1.64 billion, suggesting an increase of 3.9% from the prior-quarter reported level.

What Our Model Unveils for CFG

Our proven model conclusively predicts an earnings beat for Citizen Financial 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. That is the case here, as you can see below. 

Earnings ESP: Citizen Financial has an Earnings ESP of +1.55%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: CFG 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 second-quarter earnings of 88 cents has been unchanged in the past seven days. The figure indicates an increase of 12.8% from the year-ago reported figure. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The consensus estimate for second-quarter 2025 revenues is pegged at $2.01 billion, indicating a rise of 2.2% from the year-ago reported figure.

Other Stocks That Warrant a Look

Here are some other bank stocks, which, according to our model, also have the right combination of elements to post an earnings beat this time around.

The Earnings ESP for Texas Capital Bancshares, Inc. TCBI is +2.23% and it carries a Zacks Rank of 3 at present. TCBI is slated to report its second-quarter 2025 results on July 17. 

Over the past seven days, the Zacks Consensus Estimate for Texas Capital Bancshares’ quarterly earnings has been unchanged, indicating a jump of 60% from the year-ago reported figure.

Cullen/Frost Bankers, Inc. CFR has an Earnings ESP of +4.45% and a Zacks Rank of 2 at present. CFR is expected to release its second-quarter 2025 earnings on July 31.

Quarterly earnings estimates for Cullen/Frost have been revised upward in the past seven days, indicating an increase of 3.2% from the year-ago reported figure.

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This article originally published on Zacks Investment Research (zacks.com).

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