Citizens Financial’s profit beats estimates on strong capital markets
8:05 am Wednesday, July 17th, 2024
(Reuters) – Citizens Financial beat expectations for second-quarter profit on Wednesday, as strong capital markets softened the hit from weaker lending.
A resilient U.S. economy has encouraged corporate executives to raise capital via bond sales, boosting the fees at investment banks that underwrite such deals.
Capital markets fees surged 63%, driven by bond underwriting and loan syndication, Citizens said.
Its upbeat results echo latest quarterly reports of larger rivals such as Bank of America and JPMorgan Chase.
Higher deposit costs and weaker loan demand, however, led to an 11% drop in Citizens’ net interest income (NII) — the difference between what banks earn on loans and pay out on deposits — to $1.41 billion.
Elevated interest rates have fostered a fierce competition for deposits between banks, which are responding by bumping up their payouts to deter customers from fleeing to rivals.
Some customers are also deferring purchases to avoid taking on debt at a time when borrowing costs are at their highest since the global financial crisis.
Analysts were expecting Citizens’ NII to trough in the second quarter, according to LSEG data.
But NII in the third quarter could dip 1%-2% from the second quarter-levels before it rebounds in the last three months of the year, Citizens said.
Overall, its profit slipped 18% to $392 million, or 78 cents per share, for the three months ended June 30. Excluding one-time costs, the bank earned 82 cents a share, higher than the LSEG estimates of 79 cents.
Citizens’ stock has risen 19.5% so far this year, while rivals PNC Financial and Huntington Bancshares gained 14.3% and 12.2%, respectively, during the period.
(Reporting by Niket Nishant in Bengaluru; Editing by Shilpi Majumdar)
