Citizens Financial Group (NYSE:CFG) reported second-quarter results that came in ahead of Wall Street expectations, supported by strong growth in both net interest income and fee-based revenue.
Adjusted earnings were $1.30 per share, exceeding the consensus estimate of $1.24, while quarterly revenue reached $2.28 billion, above analyst expectations of $2.25 billion.
The stock was little changed in premarket trading following the earnings release.
Higher revenue drives earnings growth
Revenue increased 12% year over year from $2.04 billion, while net income climbed 35% to $587 million.
Net interest income rose 14% to $1.63 billion, complemented by a 9% increase in noninterest income to $652 million. The bank’s net interest margin also improved, rising 22 basis points from a year earlier to 3.17%.
“We delivered an outstanding second quarter, led by strong revenue growth, significant positive operating leverage and favorable credit performance,” said Chairman and Chief Executive Officer Bruce Van Saun.
“We are executing well on our strategic initiatives, with continued strong growth in the Private Bank, record Wealth fees and record second quarter fees in Capital Markets.”
Lending and deposits continue to expand
Period-end loans and leases totaled $147.5 billion, representing a 6% increase from the same period last year, with commercial lending and the Private Bank driving growth.
Average deposits rose 5% year over year to $183.6 billion, supported by continued growth in retail deposits and the Private Bank. Spot deposits within the Private Bank reached $17.8 billion.
Credit quality and profitability improve
Citizens reported stronger credit metrics during the quarter, with net charge-offs falling to 0.37% of average loans from 0.48% a year earlier.
Nonaccrual loans declined 6% to $1.44 billion, representing 0.97% of the total loan portfolio.
Pre-provision profit increased 24% to $889 million as positive operating leverage reached 6.4%, while the efficiency ratio improved to 61.1% from 64.8% in the prior-year quarter.
The bank ended the quarter with a Common Equity Tier 1 (CET1) ratio of 10.4% and returned $422 million to shareholders through $197 million in dividends and $225 million of share repurchases.
Citizens Financial Group stock price
