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.

The Providence, R.I., firm that sold shares to the public in an initial offering late last year 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. The results beat expectations; shares rose about 0.5% in early afternoon trading.

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

Revenue edged up 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.

Chairman and Chief Executive Bruce Van Saun said in an interview Monday that the loan growth stems from the firm's "scaling up the business" and hiring people "in areas where we see opportunities." The bank has been able to grow its customer base on the commercial side, Mr. Van Saun said, while on the consumer side, the bank has benefited from both buying assets and growing its business in auto loans and student loans.

Some of that comes from expanding into slightly less credit-worthy borrowers, but Mr. Van Saun said the bank is growing into the prime space in auto loans after having "largely been playing in super prime."

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.

The firm's strategy has been to beef up businesses not as sensitive to interest rates, such as mortgage banking and wealth management, over the next couple years. Mr. Van Saun said in an interview that hiring plans for those areas remain on track, but cautioned that a competitive environment could make it harder to hire in the short-term.

"It's tough," he said. "Everyone wants to grow in wealth. We're not backing off the trajectory we have, we're just saying it's not easy."

The bank has said it plans, by the end of 2016, to double the number of mortgage-loan officers to 700, 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.

Separately, Citizens said today it was making progress with targeting expenses and last year had achieved 28% of its $200 million cost-savings goal by 2016.

The bank expects to complete between 85% and 90% of the goal through this year, Mr. Van Saun said in the interview.

Citizens sold shares to the public Sept. 24 and its stock rose 7.4% on its first day of trading after it was priced at less than expectations the day before. The lender's majority owner, Royal Bank of Scotland Group PLC, reduced its stake in the firm and has said it plans to exit its holdings completely by the end of 2016.

Like other banks, Citizens submitted its so-called stress-test plan to regulators earlier this month. It failed the requirements last year after the Federal Reserve identified problems with its capital planning processes and the unit's calculation of losses.

Mr. Van Saun said the bank had worked with regulators over the last year to address their concerns.

"We've made a lot of progress," he said. "I think we did a good job."

Write to Julie Steinberg at julie.steinberg@wsj.com and Angela Chen at angela.chen@dowjones.com

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