Citizens Financial Says Revenue, Profit Rise -- Update
October 21 2016 - 03:40PM
Dow Jones News
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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