Citizens reports $1.8B profit in 2019

CITIZENS BANK
CITIZENS BANK reported a $1.8 billion profit in 2019. / BLOOMBERG NEWS FILE PHOTO/KELVIN MA

PROVIDENCE – Citizens Financial Group Inc., the holding company for Citizens Bank brought in a $1.8 billion profit in 2019, adding $70 million, or 4%, over its 2018 profits, the company reported on Friday.

Earnings per diluted share increased from $3.52 in 2018 to $3.81 for 2019.

At the same time, the bank added $363 million in revenue, increasing from $6.1 billion in 2018 to $6.5 billion in 2019. Part of the revenue boost came from an 18% increase in non-interest income, from $1.6 billion to $1.9 billion – a function of “record results” in mortgage banking (up 57%), capital markets (up 47%), foreign exchange and interest rate products (up 44%), card fees (up 3%), and trust and investment service fees (up 21%), as well as acquisitions.

Net interest income – the difference between interest earned on assets like loans, mortgages and securities and interest paid out to customer deposits – increased 2% from $4.5 billion to $4.6 billion, including a 4% average loan growth. This increase came despite a 6-basis-point decline in net interest margin from 3.22% to 3.16% which the bank credited to the “challenging yield curve environment” spurred by three federal interest rate cuts in 2019.

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Non-interest expense increased 6% from $3.6 billion at the end of 2018 to $3.8 billion at the end of 2019.

Year-end assets totaled $165.7 billion, a 3% increase from the $160.5 billion at the end of 2018, driven by a $4.4 billion increase in loans and leases. Year-end deposits stood at $125.3 billion, a 5%, or $5.7 billion, increase from the $119.6 billion at the end of 2018. Citizens attributed the increase to growth in money market accounts, checking with interest and savings, though this was partially offset by a 3% decrease in term deposits.

In the fourth quarter, profit decreased 3% from $465 million in the fourth quarter of 2018 to $450 million. However, this also reflects a decrease in the bank’s “after-tax” benefit, from $9 million at the end of the fourth quarter of 2018 to $4 million in the fourth quarter of 2019.

Fourth-quarter non-interest expenses increased 4% or $35 million, from $951 million at the end of the fourth quarter 2018 to $986 million as of Dec. 31, 2019. This reflected a 4% increase in salaries and employee benefits, an 7% increase in equipment and software expenses and a 5% increase in outside services.

“We are pleased with the progress we made this year in building out our capabilities, enhancing customer advice and experience and positioning our technology eco-system for the future,” Chairman and CEO Bruce Van Saun said in a statement. “Success in 2020 will require further disciplined execution, but the building blocks are in place.”

Results from the fourth-quarter 2018 and all of 2019 reflect integration costs related to the bank’s acquisition of Franklin Mortgage Co. in August 2018, the bank said. Fourth quarter 2019 results also reflect a tax benefit tied to legacy tax matters.

Nancy Lavin is a PBN staff writer. Email her at Lavin@PBN.com.

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