Citizens Financial Logs Higher Profit
October 23 2015 - 10:10AM
Dow Jones News
Citizens Financial Group Inc. on Friday said profit grew 16% in
the third quarter, as lending and fee-based revenue increased.
Average loans increased 8% from a year earlier, to $96.8
million, driven by commercial lending. Retail loans also rose and
were up 7% from last year's quarter.
The Providence, R.I.-based regional bank, which went public last
October, took a $13 million hit in the prior-year quarter related
to restructuring efforts and its separation from Royal Bank of
Scotland PLC. In the latest quarter, Citizens recorded no
restructuring charges. The bank said RBS's ownership fell to 20.9%
during the quarter.
Increases in both interest income and revenue from fee-based
businesses boosted revenue during the period. Many lenders have
been crimped by prolonged low interest rates and have struggled
with falling net interest margins. In the third quarter, Citizens
held its net interest margin, an important gauge of lending
profitability, steady at 2.76% and lifted it from 2.72% in the
second quarter.
Noninterest income, meanwhile, grew 4% amid modest increases in
card fees and trust and investment-services fees. Those increases
offset declines in revenue from mortgage banking and foreign
exchange. Lenders like Citizens have relied on fee-based revenue as
low rates have hurt interest income, and they have also moved to
cut costs.
Citizens said noninterest expenses dropped 1.5% from a year
earlier and fell 5.1% from the previous quarter, due in part to the
decline in restructuring charges. The bank has said it plans to cut
expenses by $200 million by the end of next year, and Citizens'
efficiency ratio improved to 66% from 70%.
Overall, Citizens earned $220 million, up from $190 million a
year earlier. Its per-share profit rose to 40 cents from 34 cents.
Revenue increased 4.1% to $1.21 billion. Analysts projected 40
cents in earnings per share and $1.21 billion in revenue, according
to Thomson Reuters.
The lender's provision for potential loan losses was little
changed at $76 million, reflecting continued improvement in credit
quality.
Shares, down about 6% this year, were inactive premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 23, 2015 09:55 ET (13:55 GMT)
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