The financial giant's quarterly earnings reveal challenges amid notable items and evolving market dynamics.
Citizens Financial Group, Inc.(CFG), a prominent financial institution b ased in Rhode Island, recently announced its financial results for the third quarter of 2023, shedding light on the impact of notable items and underlying financial metrics. The report showcases a notable decline in net income and a 4% decrease in total revenue compared to the previous quarter.
Quarter in Review
In the third quarter of 2023, Citizens Financial Group (CFG) reported a net income of $430 million. This figure represents a 10% drop in net income compared to the previous quarter, highlighting the challenges the bank is facing in the ever-evolving financial landscape.
Revenue Decrease
The financial giant also noted a 4% decline in total revenue. In the third quarter, CFG recorded total revenue of $2.014 billion, down from $2.094 billion in the second quarter. This reduction is in part attributed to notable items, impacting the bank's performance.
Impact of Notable Items
Notable items have had a substantial influence on CFG's financials. The report suggests that these notable items played a significant role in the reduced net income and revenue. Non-GAAP financial measures were used to assess the performance without these notable items, offering a clearer picture of underlying financial trends.
The pre-provision profit for the third quarter also displayed a noticeable decline, with a 14% decrease compared to the previous quarter. This key financial metric, calculated using non-GAAP figures, stood at $743 million.
Provision for Credit Losses
The provision for credit losses in the third quarter was reported at $172 million, reflecting a 2% drop from the previous quarter. Notable items did not significantly impact this particular metric.
Tax Expenses and Net Income
The third quarter witnessed a reduction of 10% in income before income tax expenses, which stood at $549 million. Income tax expenses decreased by 11%, amounting to $119 million. Consequently, the net income for CFG decreased by 10%, reaching $430 million. Notable items also had an effect on these metrics.
Operating leverage, a vital indicator of efficiency, was down by 2.88% for CFG in the third quarter, influenced by the decline in total revenue and noninterest expenses. Non-GAAP figures revealed an even more pronounced decline of 6.90% in operating leverage.
Efficiency Ratio
The efficiency ratio, measuring the bank's operational efficiency, stood at 64.21%. The non-GAAP efficiency ratio, excluding notable items, was 63.08%.
Return on Equity and Assets
CFG's return on average tangible common equity was 12.00%, and non-GAAP figures showed a drop to 12.51%. Return on average total tangible assets was 0.81%, and non-GAAP values indicated a decrease to 0.84%.
Tangible book value per common share also experienced a slight decrease, with a 3% drop to $27.73 in the third quarter.
Segment Analysis
The report highlights the impact of Private Bank and Non-Core segments on CFG's net income per average common share, revealing a $26 million decrease in Private Bank and a $67 million decrease in the Non-Core segment.
Citizens Financial Group's 3Q23 financial report shows the influence of notable items on its performance, leading to a 10% decrease in net income and a 4% decrease in total revenue. The report also underscores the bank's focus on non-GAAP metrics to provide a more accurate representation of its financial health amid ongoing market challenges.
