Citizens Financial Group Inc (CFG) Q3 2024 Earnings Call Highlights: Navigating Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Net Income: $392 million for the third quarter.

  • Earnings Per Share (EPS): $0.79.

  • Return on Tangible Common Equity (ROTCE): 9.7%.

  • Common Equity Tier 1 (CET1) Ratio: 10.6% (9.2% adjusted for AOCI opt-out removal).

  • Stock Buybacks: $325 million during the quarter.

  • Net Interest Margin (NIM): 2.77%, down 10 basis points.

  • Net Interest Income (NII): Down 2.9% linked quarter.

  • Fees: Down 2.7% linked quarter.

  • Allowance for Credit Losses (ACL) Coverage Ratio: 1.61%, down 2 basis points.

  • General Office Reserve: Increased to 12.1% from 11.1% in the prior quarter.

  • Private Bank Deposits: $5.6 billion, up from $4 billion in Q2.

  • Private Bank Assets Under Management: $4.1 billion.

  • Private Bank Revenue: $49.7 million, up 64% in the third quarter.

  • Loan-to-Deposit Ratio (LDR): 80.8%.

  • Liquidity Coverage Ratio (LCR): 122%.

  • Net Charge-Offs: 54 basis points, up 2 basis points.

  • Nonaccrual Loans: Increased 10% linked quarter.

  • Period-End Loans: Broadly stable; average loans down 1% linked quarter.

  • Period-End Deposits: Down 1%.

Release Date: October 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Citizens Financial Group Inc (NYSE:CFG) reported strong progress in its Private Bank, with deposits increasing to $5.6 billion from $4 billion in the previous quarter.

  • The company achieved a breakeven point in its Private Bank by mid-third quarter and expects it to be profitable in Q4.

  • CFG's commercial bank ranked number one in sponsor leveraged loan arrangements over the past 12 months.

  • The company executed well on its TOP 9 initiative, achieving a Q4 run rate benefit of $135 million, and is finalizing TOP 10, expected to deliver over $100 million by the end of 2025.

  • CFG maintained a strong capital position with a CET1 ratio of 10.6% and repurchased $325 million in stock during the quarter.

Negative Points

  • Net interest income (NII) was down 2.9% quarter-over-quarter, primarily due to lower net interest margin (NIM) and slightly lower interest-earning assets.

  • Capital markets fees decreased by 30% due to seasonal trends and some M&A deals being pushed into the fourth quarter.

  • Nonaccrual loans increased by 10% quarter-over-quarter, primarily due to an increase in commercial real estate general office loans.

  • CFG experienced a decline in commercial loans by about $580 million, reflecting paydowns and generally lower client loan demand.

  • The company's P&L was impacted by the drag from forward starting swaps and some fees being pushed out to Q4.

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