Citizens Financial profit falls on lower interest income
Oct 16 (Reuters) -Citizens Financial Group CFG.N on Wednesday reported a drop in net profit for the third quarter, as the regional lender's income from customer interest payments shrank.
Elevated interest rates have led to fierce competition for deposits between banks, which have bumped up the payouts to prevent customers from moving to rivals or other lucrative alternatives such as money market funds.
Citizens' net interest income (NII) - the difference between what a bank earns on loans and pays out on deposits - slid 10% to $1.37 billion.
Shares of the bank fell 1.1% in premarket trading.
CEO Bruce Van Saun said the third-quarter earnings were impacted by the drag from certain swap positions that commenced in July as well as some fees that pushed out to the fourth quarter.
Citizens had taken certain swap positions to hedge against potentially lower rates.
Meanwhile, capital markets were a bright spot for Citizens, as economic resilience and a searing rally in equities have given corporate executives the confidence to purse acquisitions and sales of stocks and bonds.
That has boosted the fees at banks that underwrite such deals. Citizens' capital market fees surged 40% to $94 million in the reported quarter, driven by higher bond underwriting and mergers and acquisitions advisory.
Net income for the three months ended Sept. 30 slipped to $382 million, or 77 cents per share, from $430 million, or 85 cents per share, a year earlier.
The Providence, Rhode Island-based lender expects its NII to be up between 1.5% to 2.5% in the fourth quarter sequentially, marking an inflection point. Citizens' forecast assumes a 25-basis-point Fed rate cut in November and December.
CEO Van Saun projected a strong fourth quarter with the momentum launching into 2025.
Citizens' shares have jumped 31% so far this year, while rivals PNC Financial PNC.N and Huntington Bancshares HBAN.O have gained 24.2% and 22.6%, respectively.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber
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