By Rachel Louise Ensign and Austen Hufford 

Citizens Financial Group Inc. managed to deliver on its turnaround plan in the third quarter, reporting revenue and profit increases as well as growth in loans and deposits.

The Providence, R.I.-based regional bank, which went public at the end of 2014, said average loans increased 8.3% from a year earlier on increases in commercial and retail lending as deposits rose 6.3%.

"We're executing very well on our turnaround plan," Chief Executive Bruce Van Saun said in an interview, referring to efforts to boost the lender's returns. The bank's return on equity was 8.6% in the third quarter, up from 6.6% a year earlier.

The lender's strong performance came in a quarter that began with Citizens' shares trading at some of their lowest-ever levels since going public. The stock dropped sharply after the U.K.'s Brexit vote along with other banks that are particularly poised to benefit if interest rates rise. Many believe the vote delayed the possibility of rate increases from the Federal Reserve.

Since then, though, the shares are up 17%. They rose more than 1% in Friday trading.

In all, Citizens earned $290 million, or 56 cents a share, up from $213 million, or 40 cents a share, a year prior. On an adjusted basis, earnings were 52 cents. Revenue increased 14% to $1.38 billion.

Analysts polled by Thomson Reuters were expecting earnings of 48 cents a share on $1.32 billion in revenue.

In a contrast with other banks that have reported a drop in commercial loans from the prior period, Citizens said those loans grew 1% over the quarter. Total loans rose 2% from the earlier quarter.

Fee-based income rose 23% to $435 million primarily due to a $72 million sale of a troubled debt restructuring portfolio and on mortgage banking fees, service charges and fees, foreign exchange and letter of credit fees.

Citizens said expenses increased 8.5% from a year prior, driven by a reduction in restructuring charges and special items that was partially offset by an increase in salary and employee benefits largely related to a change in timing of merit increases.

The lender's provision for potential loan losses was $86 million, up from a $76 million provision in the same quarter last year, but down from the around $90 million in each of the previous three quarters, largely due to net charge offs.

Write to Rachel Louise Ensign at rachel.ensign@wsj.com and Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

October 21, 2016 15:25 ET (19:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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