Citizens Financial (CFG) has reported better-than-expected Q2 earnings on the back of strong capital markets performance and release of reserves. Shares of the American bank holding company climbed 3.6% in Tuesday’s trading session, following the earnings release.
Quarterly earnings stood at $1.44 per share, beating the Street’s estimates of $1.09. Also, it compares favorably with $0.53 per share reported in the same period last year.
Total revenue decreased 8% year-over-year to $1.61 billion and lagged analysts’ expectations of $1.63 billion.
Net interest income (NII) fell 3% to $1.1 billion on 16 basis points contraction in net interest margin. Noninterest income declined 18% to $485 million. Lower mortgage banking income was partly offset by rise in capital market and wealth income. (See Citizens stock chart on TipRanks)
Credit provision benefit was $213 million for the second quarter on improvement in the economic outlook and strong credit performance across retail and commercial loan portfolios.
Chairman and CEO of Citizens Bruce Van Saun said, “We saw modest loan growth during the quarter, and expect that to accelerate in the second half as the economy continues to grow and excess liquidity is redeployed.”
The company expects its NII to increase 2% to 3% in the third quarter with average loans up slightly. Also, fee income is anticipated to rise 2% to 4% sequentially.
On July 16, Citigroup analyst Jill Shea initiated coverage on the stock with a Hold rating. Shea noted that improving return on average tangible common equity with higher short-end rates are positives for regional banks.
Based on the 9 Buys and 3 Holds, the stock has a Strong Buy consensus. The average Citizens price target of $51.64 implies 21% upside potential from current levels. Shares have gained 67% over the past year.
CFG scores a 9 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.