Why Citizens Financial Shares Are Sliding Today

Citizens Financial Group Inc CFG shares are trading lower after the company reported fourth-quarter FY23 earnings.

The company reported a revenue decline of 10% Y/Y to $1.988 billion, missing the analyst consensus of $1.996 billion.

Net interest income fell 12% Y/Y to $1.49 billion due to lower net interest margin and average interest-earning assets.

Adjusted net income for the quarter decreased 38% Y/Y to $426 million. Adjusted EPS of $0.85 beat the analyst consensus of $0.71.

The adjusted efficiency ratio for the quarter was 63.8% compared to a ratio of 54.4% last year.

The CET 1 ratio improved to 10.6%, compared to 10.0% a year ago. The period-end loans to deposit ratio was 82.3% compared to 86.7% last year. Provision for credit losses rose to $171 million vs. $132 million a year ago.

Bruce Van Saun, Chairman and CEO, said, “We are seeing less pressure on deposit costs and NIM, fees are beginning to rebound, expenses remain well controlled, and credit costs are as expected. Key strategic initiatives like the Private Bank, NYC Metro, TOP 9 and Non-Core are all on track, positioning us well for medium-term growth and enhanced returns.”

Citizens also announced today that its board declared a quarterly common stock dividend of $0.42 per share. The dividend is payable on February 14, 2024, to shareholders of record on January 31, 2024.

CFG didn’t repurchase shares in the quarter, given the decision to pause to cover the impact of the FDIC special assessment. As of December 31, 2023, the bank had remaining Board-authorized buyback capacity of $1.094 billion. CFG expects to resume repurchases in the first quarter of FY24.

Outlook: For FY24, CFG expects net interest income to be down 6%-9% Y/Y with average NIM of 2.80-2.85% and exiting fourth quarter FY24 with ~2.85%.

For Q1, the company projects net interest income to decline ~3% Q/Q, reflecting day count impact of ~$12 million.

Also Read: US Banking Sector Sees Fourth Consecutive Day Of Losses After Q4 Earnings Release

Price Action: CFG shares are down 1.96% at $30.59 premarket on the last check Wednesday.

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