PROVIDENCE – Citizens Financial Group Inc.'s annual profit fell 22% to $1.61 billion in 2023 compared with a year earlier as the rising cost of holding deposits and other expenses - including those from Citizens' new private bank – outstripped higher interest income on its loans.
The parent company of Citizens Bank on Wednesday posted revenue – interest and noninterest income – of $12.19 billion for 2023, up 34.4% from $9.09 billion in 2022, but at the same time, interest and noninterest expense jumped 59% to $9.47 billion.
That expense included a $225 million special assessment by the Federal Deposit Insurance Corp. in the fourth quarter to replenish the agency's insurance fund that paid out billions of dollars after the failure of two large banks last year. The assessment was industrywide.
Also, Citizens' interest expense tripled in 2023 to $3.96 billion as higher interest rates sent the expense for deposits skyrocketing. And the bank attributed other expense increases to the launch of its new private bank.
Earnings per diluted share were $3.13 in 2023, a decrease from $4.10 a year earlier, the bank said.
In the fourth quarter of 2023, the company saw a $189 million profit, down 71% from the $653 million in net income posted in the fourth quarter of 2022.
Earnings per diluted share for the quarter were 34 cents, a sharp decline from $1.25 in the same period a year earlier.
Citizens reported $1.99 billion in interest and noninterest revenue for the three months that ended Dec. 31, a 9.6% decrease from $2.2 billion in the year-ago period.
Quarterly net interest income fell 12.2% to $1.49 billion from the same quarter a year ago, with a significant drop in quarterly net interest margin – a key metric that indicates the difference between the interest income generated and the amount the company pays out – of 39 basis points from the fourth quarter of 2022, to 2.90%.
Total assets as of Dec. 31 stood at $221.96 billion down from $226.73 billion a year earlier, a 2.1% decline. The $145.9 billion in loans marked a 6.8% decrease.
Year-end deposits were down 1.8% from a year ago to $177.3 billion.
The bank also raised its loan-loss provision – money set aside in anticipation of loan defaults – for the fourth quarter to $171 million, up from $132 million in the same period of 2022.
“We continue to execute well and posted solid performance in Q4,” said CEO and Chairman Bruce Van Saun. “We are seeing less pressure on deposit costs and [net interest margin], fees are beginning to rebound, expenses remain well-controlled, and credit costs are as expected. Key strategic initiatives ... are all on track, positioning us well for medium-term growth and enhanced returns."
Citizens also announced Wednesday that its board of directors declared a quarterly common stock dividend of 42 cents per share.
(Updated to clarify Citizens Financial Group annual revenue figures for 2023. An earlier figure was total revenue, which factors in interest expenses. Citizens recorded $12.19 billion in interest and noninterest income, not including expenses.)
