Citizens Financial Group (NYSE:CFG) reported what Chairman and CEO Bruce Van Saun described as “outstanding results” for the second quarter of 2026, citing accelerating revenue growth, disciplined expense management and continued progress in strategic initiatives including the company’s private bank expansion and technology-driven efficiency program.
Van Saun said earnings per share rose 15% sequentially and 41% from a year earlier, while return on tangible common equity improved to 13.9%. CFO Aunoy Banerjee said Citizens delivered EPS of $1.30 for the quarter, up $0.17 from the first quarter, as record revenue and expense control generated more than 600 basis points of positive operating leverage year over year.
Net Interest Income and Loan Growth Strengthen
Banerjee said net interest margin expanded by three basis points from the first quarter, bringing the first-half improvement to 10 basis points. The company benefited from terminated swaps, non-core runoff and fixed-rate asset repricing, while higher loan demand led to a modest increase in funding costs.
Average loans rose 2% from the prior quarter, while period-end loans increased 3%. Banerjee said loan growth occurred across all three businesses. The private bank added $1.9 billion in period-end loans, driven by commercial line utilization and originations in residential mortgage and multifamily lending. Commercial loans excluding the private bank rose $1.5 billion on a spot basis, supported by C&I growth in corporate banking and higher line utilization across corporate and sponsor businesses.
Citizens continued to reduce commercial real estate exposure, with planned reductions driven primarily by multifamily and general office paydowns. Ted Swimmer, Head of Commercial Banking, said the company remains selective in office lending while looking at opportunities in digital infrastructure and REIT-related activity.
Fee Revenue Boosted by Capital Markets and Wealth
Capital markets fees rose 14% from the first quarter and 46% year over year, which Banerjee said marked the company’s strongest second quarter ever for the business. Loan syndications and bond underwriting drove the outperformance, while equity underwriting and M&A were broadly stable compared with the prior quarter. Banerjee said M&A fees were up significantly from a year earlier and pipelines remain strong.
Van Saun said trailing 12-month capital markets revenue was about $600 million and highlighted the company’s investments in industry verticals, private credit relationships and boutique acquisitions. Swimmer said Citizens has built “a really, really good engine” in capital markets and sees potential upside if M&A and leveraged underwriting markets improve.
Wealth also delivered a record quarter, with fees up 2% sequentially and 16% year over year. Banerjee attributed the growth to higher assets under management in the private bank and retail network, along with positive market impact.
Private Bank Continues Expansion
The private bank remained a central growth driver. Van Saun said the business ended the quarter with spot deposits of $17.8 billion, loans of $9.7 billion and client wealth assets of $11.2 billion. He said the business now contributes 11.5% of Citizens’ pre-tax income while maintaining an ROE of around 25%.
Banerjee said Citizens opened its 10th private bank office during the quarter in West Palm Beach and added a wealth team in Southern California. Brendan Coughlin, Citizens’ president, said the company has passed the three-year anniversary of the private bank and is now in “the mode of expansion,” with plans to increase its private bank office count to roughly 15 or 16 by the end of 2027.
Coughlin said the private bank’s loan yields are just above 6%, with deposit costs around 2.10%, producing a net loan-over-deposit spread just under 4%. He said the business continues to lead with deposits and investments, with loan growth picking up more recently.
Credit Trends Improve, Capital Remains Strong
Credit metrics continued to improve. Banerjee said net charge-offs were 37 basis points, down from 39 basis points in the prior quarter. Non-accrual loans fell 4% sequentially, driven by a decrease in commercial real estate as Citizens continued to work through its general office portfolio.
The allowance for credit losses was stable, with an ACL coverage ratio of 1.48%. Banerjee said the credit outlook remains positive, though the bank continues to monitor the macroeconomic environment.
Citizens ended the quarter with a CET1 ratio of 10.4%, slightly below its 10.5% target due to stronger-than-expected loan growth. The company returned $422 million to shareholders in the quarter, including $197 million in common dividends and $225 million in share repurchases. Through the first half of the year, Citizens returned $920 million to shareholders.
Management Raises Confidence in Outlook
For the third quarter, Banerjee said Citizens expects net interest income to rise 2.5% to 3.5%, driven by continued margin expansion and earning asset growth. Non-interest income is expected to increase about 1%, led by capital markets and wealth, while expenses are expected to be stable to up slightly. The company expects charge-offs to be stable to down slightly and CET1 to return to approximately 10.5%, including about $125 million in share repurchases.
For the full year, Banerjee said revenue is trending above the guidance Citizens provided in January, and expense discipline puts the company on track to deliver more than 600 basis points of positive operating leverage. Management reiterated a path to achieving a 16% to 18% ROTCE target by the end of 2027.
Citizens also discussed its Reimagine the Bank program, which aims to use technology, including AI, to improve customer experience and efficiency. Banerjee said the bank expects to exit 2026 with about $100 million of annualized pre-tax benefit, doubling in 2027 and reaching about $450 million by the end of 2028.
The company also introduced NEXT, short for Network Evolution and Experience Transformation, a long-term branch strategy focused on accelerating consumer household and deposit growth. Banerjee said the plan includes eliminating approximately 100 to 120 in-store branches, adding select standalone advisory and business banking-focused branches, consolidating and upgrading some locations, and adding specialist talent in small business and wealth.
Van Saun said Citizens feels “good about our outlook for the remainder of 2026” and believes the company is positioned for strong medium-term performance across consumer banking, commercial banking, private banking and wealth.
About Citizens Financial Group (NYSE:CFG)
Citizens Financial Group, Inc (NYSE: CFG) is a bank holding company that provides a broad range of banking and financial services to individuals, small and middle-market businesses, corporations and institutional clients. Headquartered in Providence, Rhode Island, Citizens conducts its banking operations principally through its primary banking subsidiary, Citizens Bank, and serves customers through a combination of branch locations, ATMs and digital channels. The company is publicly traded and operates under the regulatory framework applicable to U.S.
