Citizens Financial Group Inc (CFG) recently reported its fourth-quarter FY23 earnings, which have caused a decline in the company’s shares. The company’s revenue fell by 10% year-over-year to $1.988 billion, missing the analyst consensus of $1.996 billion.
One of the factors contributing to the decline was a 12% decrease in net interest income, which amounted to $1.49 billion. This decline was primarily due to lower net interest margin and average interest-earning assets.
Adjusted net income for the quarter also decreased by 38% year-over-year to $426 million. However, the adjusted earnings per share (EPS) of $0.85 beat the analyst consensus of $0.71.
The company’s adjusted efficiency ratio for the quarter was 63.8%, compared to 54.4% the previous year. This indicates a less favorable efficiency performance for the company this quarter.
On a positive note, the CET 1 ratio improved to 10.6%, compared to 10.0% a year ago. Additionally, the period-end loans to deposit ratio decreased to 82.3% from 86.7% last year. However, the provision for credit losses rose to $171 million, compared to $132 million a year ago.
Bruce Van Saun, Chairman and CEO of Citizens Financial Group, expressed optimism about the company’s strategic initiatives, such as the Private Bank, NYC Metro, TOP 9, and Non-Core, which are all on track. He believes these initiatives will position the company well for medium-term growth and enhanced returns.
In addition to the earnings report, Citizens Financial Group also announced a quarterly common stock dividend of $0.42 per share. The dividend will be payable on February 14, 2024, to shareholders of record on January 31, 2024.
Looking ahead, CFG expects net interest income to decline by 6-9% year-over-year for FY24. The average net interest margin is projected to be between 2.80% and 2.85%, with an exit rate of approximately 2.85% in the fourth quarter of FY24.
For the first quarter, the company anticipates a decline of approximately 3% in net interest income, primarily due to the day count impact of around $12 million.
Despite these announcements, CFG shares have experienced a decline of 1.96% to $30.59 in premarket trading.
Overall, Citizens Financial Group Inc’s fourth-quarter earnings report reflects a decrease in revenue and net interest income. However, the company remains optimistic about its strategic initiatives and aims to resume share repurchases in the first quarter of FY24. Investors will be watching closely to see if the company can achieve its projected net interest income and net interest margin targets for FY24.
