Citizens Financial Q1 Highlights: Earnings Miss, NII Up 43% Y/Y, Provision For Credit Losses $168M

Citizens Financial Group CFG reported Q1 revenue of $2.13 billion, up 29% Y/Y, below the consensus of $2.14 billion.
Underlying Net interest income (NII) rose 43% Y/Y to $1.64 billion, led by a higher net interest margin of 3.30% (+55 basis points Y/Y) and average interest-earning assets (+20% Y/Y), including the impact of the HSBC and ISBC transactions.
Underlying noninterest expenses rose 16% Y/Y to $1.23 billion due to increased FDIC insurance and fraud losses.
Underlying net income available to common stockholders rose 19% Y/Y to $537 million, with underlying EPS of $1.10 below the consensus of $1.13.
Underlying efficiency ratio of 57.8% was below 64.3% in the year-ago quarter, indicating improved profitability.
As of Mar 31, 2023, period-end total loan and lease balances were $154.7 billion compared to $131.3 billion a year ago.
Period-end deposits rose to $172.2 billion from $158.8 billion on an impact of $16.8 billion from the HSBC and ISBC transactions.
CFG's provision for credit losses was $168 million compared with $3 million in the year-ago quarter.
Net charge-offs rose significantly to $133 million from $59 million in Q1 2022.
As of Mar 31, 2023, the tier-1 leverage ratio was 9.4%, down from 9.6% in the prior-year quarter, while the common equity tier-1 capital ratio was 10.0% vs 9.7% in prior year.
CFG repurchased shares worth $400 million in Q1. Citizens board declared a quarterly common stock dividend of $0.42 per share, payable on May 17, 2023, to shareholders of record on May 3, 2023.
"We remain focused on our deposit initiatives, taking care of our customers and protecting key investments while trimming expenses where we can. We are hopeful that market turmoil continues to subside, and we expect that we will be able to deliver attractive mid-teens ROTCE for the year," stated Bruce Van Saun, Chairman and CEO.
Price Action: CFG shares are trading lower by 1.97% at $29.84 premarket on the last check Wednesday.

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