Citizens Financial (US:CFG) ZACKSยท2025-04-11 16:40Core Viewpoint - Citizens Financial Group, Inc. (CFG) is expected to report a decline in revenues for the first quarter of 2025, while earnings are anticipated to improve compared to the previous year [1][18]. Financial Performance - CFG's first-quarter 2025 revenues are projected to be $1.94 billion, reflecting a 0.9% decrease from the year-ago quarter [18]. - The Zacks Consensus Estimate for earnings in the first quarter is 75 cents, indicating a 15.4% increase from the previous year's reported figure [18]. - In the fourth quarter, CFG experienced a rise in non-interest income and reduced expenses, but faced challenges from lower net interest income (NII) and declining loan and deposit balances [2]. Net Interest Income (NII) - The Federal Reserve maintained interest rates at 4.25-4.5% during the first quarter of 2025, which is expected to positively impact CFG's NII due to higher yields on interest-earning assets, despite increased funding costs [3]. - Management anticipates a decline in NII of 1.5-2.5% from the fourth quarter's reported figure of $1.34 billion, with the Zacks Consensus Estimate for NII at $1.39 billion, indicating a 1.8% decline [4]. Loan Performance - The lending environment in the first quarter was affected by uncertainty from Trump's tariff plan, but demand for commercial and industrial loans and consumer loans showed decent performance in the initial months [5]. - The average interest-earning assets are estimated at $196 billion, reflecting a slight decline from the previous quarter [6]. Non-Interest Income - Mortgage rates remained around 7%, limiting improvements in refinancing activities and origination volumes, leading to lower mortgage banking fees, with the Zacks Consensus Estimate at $55.5 million, a 7.8% decline from the prior quarter [7][8]. - Trust and investment services fees are expected to see a marginal increase, with the Zacks Consensus Estimate at $75.9 million [9]. Capital Markets and M&A Activity - Global mergers and acquisitions in the first quarter of 2025 were less impressive than anticipated, primarily due to uncertainty surrounding tariffs, which affected market conditions [10][11]. - CFG's capital markets fees are estimated at $113.9 million, indicating a sequential decline of 5.8% [12]. Expense Management - CFG is focused on controlling expenses, but costs are expected to remain elevated due to expansion efforts and technological investments, with adjusted non-interest expenses projected to rise by 1-5% [15]. Asset Quality - The company is likely to have set aside a significant amount for potential bad loans, with non-accrual loans estimated at $1.59 billion, an increase of 8.1% from the previous year [16]. Earnings Expectations - CFG has an Earnings ESP of -0.27%, indicating low chances of beating estimates this quarter [17].