Citizens Financial profit jumps on higher fee income; shares hit all- time high

By Prakhar Srivastava

Jan 21 (Reuters) - Citizens Financial Group CFG.N reported a 32% surge in fourth-quarter profit on Wednesday, helped by higher net interest income and fee growth in wealth and capital markets businesses.

Shares of Citizens hit an all-time high of $63.70, and were last trading up more than 6%.

A series of Federal Reserve rate cuts and easing concerns over the impact of tariffs have boosted commercial activity, encouraging companies to pursue refinancing and expansion plans, lifting demand for underwriting and loan syndication.

Citizens' net interest income — the difference between what banks pay customers on deposits and earn as interest on loans — rose 9% from a year earlier to $1.54 billion. The gain was driven by a 20-basis-point expansion in net interest margin.

Non-interest income rose 8% to $620 million, supported by robust performance in wealth management and capital markets activities.

Wealth fees climbed 31% during the October-to-December period, while capital market fees jumped 16%, helped by higher debt and equity underwriting and loan syndication fees.

However, the U.S. government shutdown in October weighed on mergers and acquisitions activity during the quarter, delaying regulatory approvals and stalling deal timelines, prompting companies to defer transactions.

Truist analyst Brian Foran said the bank's "Reimagine" initiative is expected to lift about 2% to return on tangible common equity by 2028, noting management has "quarter-by-quarter visibility into each Reimagine workstreams and how the costs vs benefits flow."

Revenue will start to pick up over time as the bank sees improved customer experience, reducing attrition and better product usage, with management "confident in their ability to forecast that," Foran added.

The Providence, Rhode Island-based bank reported a net profit of $528 million, or $1.13 per share, for the three months ended December 31, compared with $401 million, or 83 cents, a year earlier.