Citizens Financial Group Finishes Strong in Q4: Highlights Revenue Growth and Credit Trends
Citizens Financial Group (CFG) has reported a strong finish to 2024, with the company's fourth quarter results reflecting good sequential revenue growth led by net interest income expansion and capital markets fees. In its most recent conference call, CFG Chairman and CEO Bruce Van Saun highlighted the key highlights from the quarter.
Sequential revenue growth was driven by a 10 basis point increase in net interest margin (NIM), which contributed to a 3% sequential growth in net income. Fees also grew sequentially by 6%, paced by capital markets and mortgage fees, while operating expense growth was 3.5%, paced by hiring in the private bank, private wealth, and commercial middle market.
Despite subdued loan demand, CFG more than compensated for it with NIM expansion, which drove sequential net income growth of 3%. The company also saw positive operating leverage of around 50 basis points, a sign that expenses are not growing as quickly as revenues. Credit trends are looking favorable, with non-performing assets (NPAs) down sequentially and criticized assets trending down.
Critically, CFG added $162 million provision against $189 million charge-offs in the quarter, and its allowance for credit losses to loan ratio increased slightly to 1.62%. The company expects that credit trends should continue and that they should be able to see credit costs come down in 2025.
CFG also continued to repurchase shares in the quarter, with $225 million brought back into the company, bringing the full year total to $1.05 billion. This is a significant effort by the company to return value to shareholders and reduce its share count.
In addition to these financial highlights, CFG made progress on several key initiatives during the quarter. The Private Bank continued to ramp up nicely, growing customer bases and hitting all financial targets. The business reached $7 billion in deposits, $3.1 billion in loans, and $4.7 billion in assets under management (AUM), and was profitable for the first time in the quarter.
CFG also launched a new wealth team in South Florida and continued to work on its BSO efforts, which saw a reduction of non-core loans by $4.2 billion in 2024. The company is looking to accelerate this process going forward.
Looking ahead to 2025, CFG expects solid growth in net interest income (NII) due to further NIM expansion and a resumption of modest net loan growth. Fees should grow nicely paced by capital markets and wealth fees. The company anticipates attractive positive operating leverage for the full year of around 1.5% and expects credit costs to improve year-on-year, with reserve releases continuing throughout the year.
