Fee Income to Support Citizens Financial’s Q3 Earnings Amid Lower NII
Citizens Financial Group, Inc. (NYSE: CFG) is scheduled to report its third-quarter 2024 results on Oct. 16, before the opening bell. The company’s earnings and revenues in the third quarter are expected to have declined from the year-ago reported figures.
In the second quarter of 2024, CFG’s earnings missed the Zacks Consensus Estimate on lower net interest income (NII), a rise in provisions and operating expenses. However, an increase in non-interest income and lower allowance for credit losses offered some support.
The company’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, the negative surprise being 16.39%, on average.
Citizens Financial Group, Inc. Price and EPS Surprise
Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote
Factors to Influence CFG’s Q3 Earnings
Loans: The clarity on the Fed’s rate cut path and the stabilizing macroeconomic backdrop are likely to have provided support to the lending scenario. According to the latest data from the Fed, the demand for commercial and industrial and consumer loans was modest in the first two months of the quarter, while demand for commercial real estate remained subdued.
The company’s lending book is likely to have been positively impacted by improvement in commercial loans, while the subdued real estate loan demand might have offset growth to some extent.
The Zacks Consensus Estimate for average interest-earning assets is pegged at $199 billion, indicating an increase of nearly 1% from the prior quarter’s reported figure. We estimate the metric to be $212.5 billion.
Net Interest Income: On Sept. 18, the Federal Reserve cut interest rates by 50 basis points to 4.75-5% for the first time since March 2020. While this development might prove to be helpful in the long term, it is not expected to have a positive impact on CFG’s NII during the third quarter.
Also, relatively higher rates might have hurt NII growth prospects similar to the last quarter due to the elevated funding/deposit costs and an inverted yield curve during the major part of the quarter.
Management expects NII …
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