Rebound in M&A Deal to Aid Citizens Financial's (CFG) Q2 Earnings

Core Viewpoint - Citizens Financial Group (CFG) is anticipated to report a year-over-year decline in both quarterly revenues and earnings for Q2 2024, with specific estimates indicating a challenging financial environment [1][31]. Key Factors & Estimates for Q2 - Net Interest Income (NII): The Federal Reserve's steady interest rates at a 23-year high of 5.25-5.5% are expected to limit significant improvements in NII. The inverted yield curve and high funding costs are also likely to negatively impact NII growth [3]. - Fee Income: Despite a decline in mortgage rates from over 8% to nearly 7%, mortgage origination volume remains weak due to high home prices and lower supply. This has resulted in limited improvement in mortgage demand [4]. However, robust equity market performance is expected to boost trust and investment services fees, with a consensus estimate of $70 million, reflecting a 2.9% increase from the previous quarter [5]. - Earnings Estimates: The consensus estimate for NII is $1.42 billion, indicating a 1.9% decrease from the prior quarter. The estimate for mortgage banking fees is $57.1 million, showing a 16.5% rise from the previous quarter [10][11]. - Non-Interest Income: Management expects non-interest income to increase by approximately 3-4%, with a consensus estimate of $534.9 million, suggesting a 3.5% sequential increase [13]. - Asset Quality: CFG is expected to set aside substantial provisions for potential bad loans due to anticipated economic slowdown [14]. - Lending Activities: A stabilizing macroeconomic backdrop and expectations of Federal Reserve easing interest rates later this year are likely to support lending activities, particularly in commercial and industrial loans [22]. - Expenses: CFG's expenses are projected to rise due to the opening of private banking offices, franchise expansion, and investments in technology [27]. Earnings Whispers - The Zacks Consensus Estimate for second-quarter earnings has been revised upward by 1.3% to 79 cents per share, indicating a 14.1% decrease from the previous year. The consensus estimate for quarterly revenues is $1.95 billion, reflecting a 6.7% decline from the prior-year quarter [31].