Citizens Financial Group Q1 Earnings Call Highlights

Key Points

• Strong Q1 results: Citizens reported EPS of $1.13 (up ~47% YoY) and ROTCE of 12.2%, driven by net interest income growth and NIM expansion as NIM reached 3.14% (up 7 bps sequentially).
• Record fee performance led by capital markets: Noninterest income rose 11% YoY with capital markets fees up 34% YoY, and management maintained its fee-growth outlook while guiding Q2 NII +3–4% and noninterest income +3–5%.
• Balance-sheet strength and capital actions: CET1 was 10.5% with an allowance for loan losses of 1.52%, loans and deposits each rose ~1% QoQ while CRE exposures were reduced, and the bank returned about $500 million to shareholders; proposed regulatory changes could lower RWA ~10%, potentially adding over 100 bps to CET1.

Citizens Financial Group NYSE: CFG reported a “strong” start to 2026, posting first-quarter earnings per share of $1.13 and return on tangible common equity (ROTCE) of 12.2% as net interest income growth and fee strength helped offset a seasonally softer period, management said on the company’s earnings call.

Chairman and CEO Bruce Van Saun said the bank delivered year-over-year EPS growth of 47%, positive operating leverage of 7%, and net interest margin (NIM) expansion of 24 basis points despite “geopolitical tensions and uncertainty in the macro environment.” He added that Citizens ended the quarter with a common equity tier 1 (CET1) ratio of 10.5% and an allowance for loan losses of 1.52%, while credit trends “continue to be favorable across our portfolios.”

Net interest income and margin expanded

CFO Aunoy Banerjee said results were “paced by strong NII,” driven by continued NIM expansion and solid loan growth. Net interest income rose 1.6% from the prior quarter, which Banerjee attributed to a higher margin and increased earning assets, including loan growth, more than offsetting a day-count impact of about $22 million.

Citizens’ NIM improved 7 basis points sequentially to 3.14%. Banerjee said the quarter’s margin expansion was driven mainly by “reduced drag from terminated swaps and non-core runoff” and modest benefits from fixed-rate asset repricing and funding mix improvements.

Deposit costs declined in the quarter. Banerjee said interest-bearing deposit costs fell 16 basis points and total deposit costs fell 12 basis points, while the cumulative interest-bearing deposit beta improved to 50% following repricing after the last rate cut. He added that even with the Federal Reserve now expected to hold steady in 2026, Citizens still projects a high-40s beta for the cycle.

In Q&A, Van Saun said a “little higher rate scenario” would be “modestly positive” for Citizens given the company’s asset sensitivity, while Banerjee emphasized that a meaningful portion of the expected margin benefit for the year is not rate-dependent, pointing to the impact of terminated swaps and non-core runoff.

Record first-quarter fee performance led by capital markets

Banerjee said noninterest income rose 11% year-over-year, though it declined 2% from the fourth quarter. He described the quarter as Citizens’ “best-ever first quarter fee result,” with capital markets fees up 34% from a year earlier.

Van Saun told analysts the company was “pleased with the performance of the capital markets franchise” given increased volatility and uncertainty, particularly in March “once the war kicked in.” He and commercial banking head Ted Swimmer pointed to diversification across advisory, bond and equity underwriting, and syndicated loans, with some transactions postponed from March into April.

Swimmer said Citizens continued to sign new mandates during the volatile period and is “doing more complex transactions” following investments in corporate finance and industry specialization. Van Saun added the quarter was “a record first quarter for us in capital markets fees,” and management said it is not changing its full-year fee growth outlook at this time.

Other fee categories were mixed. Banerjee said global markets revenue increased $10 million from the fourth quarter amid higher client hedging activity in interest rate products and energy-related commodities. Wealth fees rose 2% sequentially and 23% year-over-year, reflecting higher advisory fees and momentum in fee-based AUM growth, though the quarter also included market impacts on AUM. Mortgage-related revenue declined 19% sequentially, which Banerjee attributed to lower MSR valuation partially offset by slightly higher production and servicing fees.

Loan growth broadened as Citizens continued portfolio shift

Average and period-end loans rose 1% from the prior quarter, with Banerjee citing “solid loan growth across each of the businesses.” Commercial loans excluding the private bank rose 1% on a spot basis, supported by net new money originations and higher commercial line utilization, partly offset by commercial real estate (CRE) paydowns. Citizens continued to reduce CRE exposures, with commercial banking CRE balances down about 4% in the quarter and 16% year-over-year.

The private bank delivered another quarter of growth, with period-end loans up about $600 million, driven by multifamily and residential mortgage activity, according to Banerjee. Retail loans excluding non-core rose about $300 million on a spot basis, led by real estate-secured categories, but were offset by roughly $500 million of runoff in the non-core auto portfolio.

On the consumer side, President Brendan Coughlin said core retail loans were up about 4% year-over-year, “heavily driven by HELOC and mortgage.” He said Citizens was the “number one originator in the United States at home equity lending,” adding that the portfolio has low loan-to-value ratios, strong FICO scores, and is made up of “all depository relationship customers.” Coughlin also said the bank is seeing “50%+ growth in new credit card originations” following the launch of new products, with balance growth expected to become more visible in the second half of the year.

Deposits, credit, capital return, and strategic initiatives

Deposits increased during the quarter, helped by the private bank. Banerjee said average deposits rose 1% (or $1.5 billion) quarter-over-quarter, primarily driven by private bank growth to $16.6 billion, partly offset by seasonal commercial impacts. Non-interest-bearing balances increased $1.3 billion (3%) from the fourth quarter and rose 11% year-over-year, improving mix to 23% of total deposits. Banerjee said consumer deposits represent 64% of total deposits, compared with a peer average of about 56%.

Credit metrics improved. Banerjee reported net charge-offs of 39 basis points, down from 43 basis points in the prior quarter, and said non-accrual loans declined modestly, driven by improvement in commercial portfolios partially offset by an increase in mortgage.

Citizens returned about $500 million to shareholders in the quarter, consisting of $198 million in common dividends and $300 million in share repurchases, Banerjee said.

Management also highlighted ongoing initiatives:

• Private bank expansion: Van Saun said the private bank and wealth business now accounts for roughly 10% of pre-tax income, with ROE “in excess of 25%.” Banerjee said the private bank contributed 11 cents to EPS, up from 10 cents in the prior quarter. The company opened offices in Menlo Park and Laurel Village and expects additional offices in West Palm Beach and Greenwich later this year.
• Reimagine the Bank: Van Saun reaffirmed a $450 million P&L target by the end of 2028 and said Citizens estimates about $100 million in 2026 exit run-rate benefits. Coughlin said the program is already generating “quick wins” such as vendor savings and facility closures, while also deploying AI tools in the call center and software development. He said Citizens expects that by the end of 2026, 25% of calls will be answered by “non-humans,” ramping to 50% in 2027.
• New York City Metro initiative: Van Saun said Citizens is analyzing its branch footprint for net new investment and optimization, with New York City “likely to see growth in branches in coming years,” and expects more detail mid-year.
• One Citizens collaboration model: Van Saun said the bank is gaining traction by coordinating across consumer, private bank, and corporate banking to serve business owners and entrepreneurs.

Looking ahead, Banerjee guided for second-quarter net interest income growth of 3% to 4% and noninterest income growth of 3% to 5%, led by capital markets, while expenses are expected to be flat to up 1%. He said Citizens expects to end the second quarter with CET1 of 10.5% to 10.6%, including about $225 million of share repurchases.

Van Saun also addressed regulatory capital proposals, saying it is “still early days,” but that changes could reduce risk-weighted assets by roughly 10%, translating to “in excess of 100 basis points” of CET1 benefit, while noting AOCI phase-in dynamics could offset some of that impact.

About Citizens Financial Group NYSE: CFG

Citizens Financial Group, Inc NYSE: CFG is a bank holding company that provides a broad range of banking and financial services to individuals, small and middle-market businesses, corporations and institutional clients. Headquartered in Providence, Rhode Island, Citizens conducts its banking operations principally through its primary banking subsidiary, Citizens Bank, and serves customers through a combination of branch locations, ATMs and digital channels. The company is publicly traded and operates under the regulatory framework applicable to U.S.

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