PROVIDENCE – Citizens Financial Group Inc. today posted a 2007 profit of $2.65 billion, a decline of $270 million or 9.3 percent from 2006’s $2.92 billion, as losses on more than doubled compared with last year.
Its parent company, the Edinburgh-based Royal Bank of Scotland plc, said Citizens “demonstrated resilience” under tough housing and credit market conditions, noting that the bank’s total income grew from $6.12 billion in 2006 to $6.25 billion last year, a 2.2-percent increase.
RBS attributed the increase to to “modest growth” in Citizens’ net interest margin, which rose to 2.80 percent last year from 2.72 percent the year before, along with “strong fee growth in several products.”
And despite the significant increase in loan losses, RBS added, the quality of Citizens’ loan portfolio remains high. But the company acknowledged that the economic situation in the United States – where Citizens is the ninth-largest bank in amount of deposits – has put Citizens to the test.
Citizens reported a 2.3-percent increase in direct expenses, from $2.87 billion in 2006 to $2.92 billion last year.
“Market conditions remain difficult, and we continue to respond to challenging income prospects with tight cost control,” RBS said in its earnings report.
For instance, the report notes, the Citizens payroll has been pared from 23,100 full-time equivalent employees in 2006 to 22,500 last year, a 2.6-percent reduction.
The entire RBS Group – including European banking giant ABN Amro Holding NV, which an RBS-led consortium acquired in October (after another U.S. institution acquired the ABN Amro North America Holding Co., parent of the Chicago-based LaSalle Bank Corp. READ MORE) – reported a 9.2-percent increase in profits year over year, to 10.28 billion British pounds in 2007 from 9.41 billion pounds the year before.
The ailing dollar ()READ MORE has further dampened the U.S. division’s return for RBS, the company noted. When the Citizens Financial’s profit was converted from dollars to British pounds, the bank saw a year-over-year decline of 16.4 percent, to 1.32 billion pounds last year from 1.58 billion pounds in 2006.
Citizens Financial Group Inc. – owned by the U.K.-based Royal Bank of Scotland Group plc – is a $159 billion commercial bank holding company with about 24,500 employees. Its two bank subsidiaries are RBS Citizens NA and Charter One Bank parent Citizens Bank of Pennsylvania. Citizens Financial and its subsidiaries operate more than 1,600 bank branches in 13 states plus non-branch offices in about 40 states. Additional information is available at CitizensBank.com.
