Citizens Financial Group (CFG) Up 0.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Citizens Financial Group (CFG). Shares have added about 0.5% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Citizens Financial Group due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Citizens Financial Group, Inc. before we dive into how investors and analysts have reacted as of late.

CFG Q4 Earnings Beat Estimates on NII & Fee Income Growth

Citizens Financial reported fourth-quarter 2025 earnings per share (EPS) of $1.13, which surpassed the Zacks Consensus Estimate of $1.11 per share. The metric rose 32.9% from the year-ago quarter.

Results benefited from a rise in non-interest income and net interest income. The increase in loan and deposit balances was also encouraging. However, a rise in expenses was a major headwind.

Net income (GAAP basis) was $528 million, which rose 31.6% from the prior-year quarter.

For full-year 2025, earnings of $3.86 per share surpassed the Zacks Consensus Estimate of $3.84. This compares favorably with $3.03 reported in 2024. The company reported net income (GAAP basis) of $1.8 billion, which increased 21.3% year over year.

Revenues & Expenses Rise

Total revenues in the fourth quarter were $2.16 billion, which topped the Zacks Consensus Estimate by 0.4%. The top line rose 8.6% year over year.

Full-year revenues aggregated to $8.25 billion, which increased 5.6% year over year. The top line surpassed the Zacks Consensus Estimate of $8.24 billion.

Citizens Financial’s NII rose 8.8% year over year to $1.54 billion, driven by higher net interest margin.

The NIM expanded 20 basis points year over year to 3.07%, driven by the benefits of non-core runoff and terminated swap impacts, as well as fixed-rate asset repricing benefits, partially offset by lower asset yields.

Non-interest income increased 8% year over year to $620 million. The improvement resulted from increased service charges and fees, capital markets fees, wealth fees and other income.

Non-interest expenses increased 2.1% year over year to $1.34 billion. The rise was primarily due to an increase in salaries and employee benefits, equipment and software costs, and other operating expenses. Underlying non-interest expenses increased 3.9% from the prior-year quarter.

The efficiency ratio was 62.2% in the fourth quarter compared with 66.3% in the year-ago quarter. A fall in the efficiency ratio reflects increased profitability.

Loan Balance & Deposits Up Sequentially

As of Dec. 31, 2025, period-end total loans and leases were $142.7 billion, up 1.3% from the prior quarter, while total deposits rose 1.8% sequentially to $183.3 billion.

Credit Quality Improves

As of Dec. 31, 2025, Citizens Financial’s provision for credit losses was $137 million, which declined 15.4% from the year-ago quarter.

The allowance for credit losses decreased 3.4% year over year to $2.2 billion.

Net charge-offs decreased 17.9% on a year-over-year basis to $155 million.

Non-accrual loans and leases declined 9.6% from the year-ago quarter to $1.5 billion.

Capital Position Weak

As of Dec. 31, 2025, the tier 1 leverage ratio was 9.4%, unchanged from the prior-year quarter.

The common equity tier 1 capital ratio was 10.6%, down from 10.8% in the prior-year quarter. The total capital ratio was 13.8%, down from 14% in the prior-year quarter.

Share Repurchase Update

In the fourth quarter of 2025, CFG repurchased $125 million of common shares and paid out $201 million in common dividends.

Outlook

Q1 2026 (Underlying Basis)

Management expects NII to be stable, compared to the the fourth quarter of 2025 level of $1.53 million.

Non-interest income is anticipated to be stable from the $620 million reported in the fourth quarter of 2025.

Adjusted non-interest expenses are projected to rise 2-2.5% from the fourth-quarter 2025 level of $1.34 billion.

Net charge-off ratio is targeted to be stable to slightly lower from the fourth quarter level.

The CET1 ratio is envisioned to be 10.5-10.6% compared with the 10.6% reported in the previous quarter.

The tax rate is expected to be 22%.

2026 (Underlying Basis)

Management expects NII to rise 10-12% from the $5.8 billion reported in 2025.

NIM is expected to progress toward 3.25% in the fourth quarter of 2026 from the 3.07% recorded in fourth-quarter 2025.

Average loans are projected to be up 3-5% from the $142.7 billion reported in 2025.

Average earnings assets are forecast to rally 4-5% from the $197 billion registered in 2025.

Non-interest income is anticipated to rise 6-8% from the $2.4 billion reported in 2025.

Adjusted non-interest expenses are projected to grow 4-5% from the $5.3 billion posted in 2025.

Net charge-offs are suggested to be in the mid-to-high 30 bps.

The CET1 ratio is envisioned to be 10.5-10.6%.

The company expects to repurchase $700-8500 million worth of shares.

The tax rate is expected to be 22%.

Medium-Term Target

Management expects the CET1 ratio to converge to 10-10.5%.

The company targets NIM of 3.25-3.50%, up from the previously mentioned 3.25-3.40%.

The efficiency ratio is projected to be in the mid-50s.

The company is expected to reach a dividend payout ratio of 35-40%.

Management expects the return on average tangible common shareholders’ equity to be 16-18%. The execution of the target will be supported by the company’s strategic initiatives, as well as the NII tailwinds expected from 2025 to 2027.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

At this time, Citizens Financial Group has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Citizens Financial Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Citizens Financial Group is part of the Zacks Banks - Northeast industry. Over the past month, Bank OZK (OZK), a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended December 2025 more than a month ago.

Bank OZK reported revenues of $440.65 million in the last reported quarter, representing a year-over-year change of +6.9%. EPS of $1.53 for the same period compares with $1.56 a year ago.

For the current quarter, Bank OZK is expected to post earnings of $1.46 per share, indicating a change of -0.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.

Bank OZK has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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

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