PROVIDENCE – Buoyed by a $331 million after-tax benefit from the new tax law, Citizens Financial Group Inc. on Friday reported 2017 profit increasing 58.1 percent to $1.7 billion, or $3.25 per diluted share.
Fourth-quarter profit more than doubled to $666 million, or $1.25 per share, compared with $282 million a year earlier.
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Excluding the one-time tax benefit, the Providence-based parent of Citizens Bank still performed well. Its underlying 2017 profit totaled $1.3 billion, or $2.58 per diluted share, representing a 28.3 percent increase from $1 billion reported for 2016.
The bank’s net interest margin grew to 3.08 percent compared with 2.9 percent a year earlier.
“A great finish to a year of significant progress,” commented Bruce Van Saun, chairman and CEO, during a call with investors. “We enter 2018 with some good momentum.”
Citizens – along with others in the business community – has benefited from the sweeping U.S. tax overhaul signed into law last month. Specifically, the company realized a $331 million gain from the deferred tax liability. The gain was reduced to a net of $317 million after the bank gave $22.5 million to its charitable foundation and employees.
Van Saun said the bank – in accordance with accounting rules – had to take the benefit in the same quarter the new tax law was enacted.
The bank also benefited from a $17 million gain on the sale of some troubled debt.
During the fourth quarter, the bank cut its workforce by 102 full-time employees compared to the prior quarter, saying it reflected seasonality and efficiency efforts. The company’s 17,594 full-time employees during the fourth quarter, meanwhile, represents a decrease of 45 compared with the prior-year quarter.
Citizens’ total noninterest and interest income for the fourth quarter grew 13.1 percent to $1.7 billion. For the year, total noninterest and interest income grew 12 percent to $6.4 billion compared with $5.8 billion a year earlier.
For the quarter, interest income grew 15.1 percent to $1.3 billion thanks largely to an increase in loans held for sale. Total loans and leases held for sale grew 2.8 percent to $111.3 billion.
Nonperforming loans and leases as a percentage of total of loans and leases fell to 0.79 percent compared with 0.97 percent a year earlier.
Interest income was offset by a year-over-year increase in deposit expenses.
Noninterest income grew 7.2 percent to $404 billion with robust growth realized in card, investment and capital market fees. The largest noninterest cost increase was related to outside services.
Total assets grew 1.9 percent to $152.3 billion compared with $149.5 billion a year earlier. Deposits, meanwhile, grew 4.8 percent to $115.1 billion.
Van Saun holds an optimistic outlook moving forward. He told investors the bank isn’t counting on any external forces it can’t control, but said an easing regulatory environment and increases to federal interest rates could continue to help the bottom line.
Absent any changes, however, Van Saun maintains the bank will continue to perform well.
“We have plenty of fuel in the tank, so to speak,” he said.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
