Citizens Financial ( NYSE: CFG ) Q3 earnings topped the average Wall Street estimate as expenses fell from Q2 and net interest income rose, the company said Wednesday.
"We continue to capture the benefit of higher rates, with deposit costs under control, higher net interest margin and net interest income," said Chairman and CEO Bruce Van Saun.
Q3 underlying EPS of $1.30, exceeding the consensus of $1.27, rose from $1.14 in Q2 and from $1.22 in Q3 2021.
Still, CFG shares fell 1.6% in premarket trading.
Q3 net interest income of $1.67B climbed from $1.51B in the prior quarter and from $1.15B in the year-ago quarter. Net interest margin (fully taxable equivalent) of 3.25% increased from 3.04% in the prior quarter and from 2.72% in the year-ago period.
For Q4 2022, Citizens ( CFG ) expects NII to rise ~3% and NIM at 3.30%-3.35%, with loan growth stable to up modestly. Noninterest income is also expected to be stable to up modestly. Net charge-off ratio is expected to rise to ~20-22 basis points from 19 bps reported in Q3. Common Equity Tier 1 ratio is expected to be at the upper end of 9.5%-10% target range.
The bank expects net interest margin to rise to ~3.50%+ by the end of 2023.
Citizens Financial ( CFG ) said deposit betas are tracking well within expectations, but the "ultimate outcome depends on pace and level of Fed hikes."
In addition, the company is increasing its focus on protecting NIM and ROTCE through 2024 and beyond.
Noninterest expense of $1.24B vs. $1.31B in Q2 and $1.01B in the Q3 2021.
Provision for credit losses of $123M dropped from $216M in the prior quarter and compared with a benefit of $33M in the year-ago period. The current quarter's provision came in higher than consensus and was attributable to a reserve build of $61M vs. the $30M estimated, said Wolfe Research's Bill Carcache.
Q3 noninterest expense of $1.24B slipped rom $1.31B in Q2 and increased from $1.01B in Q3 2021.
Q3 average loans and leases of $156.9B vs. $153.9B in the previous quarter.
Q3 average deposits of $177.6B vs. $176.4B in Q2.
Conference call at 9:00 AM ET.
Earlier, Citizens Financial ( CFG ) non-GAAP EPS of $1.30 beats by $0.03, revenue of $2.17B beats by $40M .
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Citizens Financial Q3 earnings helped by cost control, higher interest rates