By Angela Chen 

Citizens Financial Group Inc. reported a 30% increase in fourth-quarter profit as strength in retail and commercial loans pushed up net interest income for the regional lender, which went public late last year.

The results beat expectations.

The Providence, R.I., firm said it earned $197 million in the December quarter, up from $152 million a year earlier. On a per-share basis, the bank's earnings increased to 36 cents from 27 cents a year earlier.

Excluding special items, per-share earnings rose to 39 cents, from 30 cents a share a year earlier.

Revenue edged up slightly to $1.18 billion from $1.16 billion.

Analysts polled by Thomson Reuters had expected earnings of 34 cents on revenue of $1.17 billion.

For the most recently ended quarter, net interest income edged up 2.4% to $840 million from a year earlier. This was driven by average loans and leases that increased $2.4 billion, or 3%, on strength in both retail and commercial loans.

Like other regional banks, Citizens has faced stubbornly low interest rates that have dented interest income. Citizens said its net interest margin, a key margin of lending profitability, increased to 2.8% from 2.77% the quarter before, though it was down from 2.83% a year earlier.

Noninterest income fell 11% to $339 million, a result of a reduction in securities gains and a decline in service charges and fees and card fees, the bank said.

Capital markets were a bright spot. Fees for that business grew to $25 million from $18 million a year earlier.

Citizens went public on Sept. 24 and its stock rose 7.4% on its first day of trading after it was priced below expectations the day before. The lender's parent, Royal Bank of Scotland Group PLC, has reduced its stake in the firm by a quarter and has said it would exit its holdings completely by the end of 2016.

The bank by the end of 2016 plans to increase the number of mortgage-loan officers to 700, up from 350 at the beginning of 2014. In addition, the bank plans to add between 60 and 75 financial consultants in its wealth-management business to its pool of 300.

Shares of Citizens, which were inactive premarket, have risen about 3% in the past three months through Friday's close.

Write to Angela Chen at angela.chen@dowjones.com

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