PROVIDENCE – Citizens Financial Group Inc. on Friday reported second-quarter profit grew 30.9 percent to $318 million, or 63 cents per diluted share, compared with $243 million, or 46 cents per diluted share, a year earlier.
At the same time, total interest and noninterest income grew 12.4 percent to $1.6 billion compared with $1.4 billion a year earlier.
Bruce Van Saun, chairman and CEO, attributed the double-digit growth to the bank’s ability to deliver on its strategic initiatives, specifically noting strong gains in fee-based business.
“We’re turning a corner, so to speak, from a turnaround phase to a growth phase,” Van Saun said during a conference call with investors.
Noninterest income, including fee-based businesses, grew 4.2 percent to $370 million compared with $355 million in the 2016 second quarter. The bank realized especially robust growth in card fees, which grew income 15.7 percent to $59 million. Its capital market fees increased 34.2 percent to $51 million.
The bank noted its results for the quarter ended June 30 reflected a pretax $26 million impact related to impairments on aircraft lease assets, which – in addition to provision expense of $70 million – resulted in total credit-related costs of $96 million. The loss reduced noninterest income by $11 million and increased noninterest expense by $15 million, according to the Providence-based bank. Reported year-over-year operating leverage totaled 5 percent, which the bank notes would have totaled 7 percent without the impact of the lease impairments.
Citizens realized a 15.8 percent increase in interest and fees on loans and leases and loans held for sale, which totaled $1 billion for the quarter compared with $903 million a year earlier. Investment securities grew 9.2 percent to $154 million. The growth together helped fuel a 15.2 percent increase to total interest income, which grew to $1.2 billion for the quarter.
Overall, total loans and leases and loans held for sale for the company grew 5.1 percent to $109.8 billion. Nonperforming loans and leases to total loans and leases ratio of 0.94 percent improved from 1.01 percent a year earlier, which the bank says reflects a reduction in retail nonperforming loans and leases.
Total assets grew 4.3 percent to $151.4 billion. Total deposits grew 6.9 percent to $113.6 billion.
Net interest margin grew to 2.97 percent compared with 2.84 percent a year earlier, while return on average equity improved 154 basis points to 6.5 percent, and return on average total assets improved 16 basis points to 0.85 percent.
Van Saun told investors he’s confident about the bank moving forward.
“We have plenty of fuel in the tank to continue to execute our strategy,” he said.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
