Citizens Financial Group (NYSE:CFG) reported record revenue and higher profitability for the third quarter of 2026, supported by net interest income growth, continued margin expansion and expense discipline. The company also raised its quarterly dividend, expanded its share-repurchase authorization and projected further earnings momentum in the fourth quarter.
Chairman and CEO Bruce Van Saun said earnings per share rose 8.5% from the prior quarter and 34% from a year earlier, while return on tangible common equity, or ROTCE, improved to 15.1% from 13.9% in the second quarter. The company reported $1.41 in third-quarter EPS.
“Total revenues hit a record in Q3,” Van Saun said, adding that the company generated positive operating leverage of 1.8% sequentially and 5.3% year over year. CFO Aunoy Banerjee said pre-provision net revenue rose 4.5% from the second quarter and about 19% from the prior-year period.
Net Interest Income and Margin Expand
Net interest income increased 2.7% sequentially as interest-earning assets rose 1% and the net interest margin expanded by 2 basis points to 3.19%. The margin was 19 basis points higher than a year earlier.
Banerjee said the benefit from terminated swaps added 2 basis points to third-quarter margin, while improved yields on fixed-rate assets were largely offset by funding costs as rates moved higher. Average demand deposits grew 2%, helping limit the increase in overall deposit costs to 3 basis points.
Management expects net interest income to rise approximately 2.5% to 3% in the fourth quarter. Its outlook assumes the Federal Reserve raises its target rate by 25 basis points in December. Citizens projected fourth-quarter net interest margin of 3.23% to 3.26%, compared with its longer-term target range of 3.30% to 3.50% by the fourth quarter of 2027.
During the question-and-answer session, Van Saun said the bank’s asset-sensitive balance sheet could benefit if the Federal Reserve raises rates further. He also pointed to the runoff of legacy swap-related accounting drag, a steep yield curve and a focus on low-cost deposits as factors supporting margin expansion.
Fees, Loans and Deposits
Noninterest income declined 1% from the second quarter but increased 3% from a year earlier. Capital-markets fees were slightly lower sequentially amid market volatility, although mergers-and-acquisitions fees rose significantly from the prior quarter. Loan syndication, bond underwriting and equity underwriting fees declined as some transactions were delayed into the fourth quarter.
Citizens said its M&A pipeline was at record levels. Ted Swimmer, head of commercial banking, said the company entered the fourth quarter with a substantial backlog and increasing fees per average transaction. He said some opportunistic bond refinancings could be postponed if rates rise further, though the bank had not yet seen that occur.
Wealth-management fees reached another record, increasing 7% sequentially and 17% year over year, driven by higher advisory fees and asset growth in the private bank and retail network. Mortgage fees declined, in part because of a $13 million negative net mortgage servicing rights valuation resulting from mortgage-rate volatility.
Average and period-end loans increased slightly from the second quarter. Private-bank loans rose $2 billion to $11.7 billion, aided by commercial line utilization and originations in residential mortgage and multifamily lending. Commercial loans excluding the private bank declined $1.5 billion, or 2%, as planned commercial real estate reductions, multifamily and office paydowns, and lower C&I line utilization outweighed growth elsewhere.
Average deposits were stable sequentially, with commercial growth offset by lower consumer balances. Management said it expects seasonal deposit trends to improve in the fourth quarter. Private-bank deposits reached $18.5 billion, while consumer deposits represented 63% of total deposits.
Credit, Capital Returns and Outlook
Credit metrics remained broadly favorable. Net charge-offs were unchanged sequentially at 37 basis points, while the allowance for credit losses declined modestly and the allowance coverage ratio fell to 1.47%. Management attributed the lower reserve level largely to portfolio mix changes, including reduced exposure to general office and multifamily lending and growth in lower-loss-content lending categories.
Banerjee said the company used a somewhat more conservative economic scenario in its reserve methodology because of the higher-rate environment. Still, executives said they saw no broad-based credit deterioration. Swimmer said commercial real estate performance was developing as planned, including continued paydowns, while Van Saun said retail delinquencies were flat and there were no signs of emerging consumer stress.
Citizens ended the quarter with a common equity tier 1 ratio of 10.5%, at the top end of its medium-term operating range. Its AOCI-adjusted CET1 ratio was 8.7%, and its tangible common equity ratio was 6.7%, reflecting the impact of higher rates on accumulated other comprehensive income.
- The board increased the quarterly common dividend 13% to $0.52 per share.
- The board expanded common share-repurchase capacity by $1.3 billion to $1.95 billion.
- Citizens returned about $322 million to shareholders during the third quarter, including $197 million in dividends and $125 million in buybacks.
- The company expects to repurchase about $200 million of shares in the fourth quarter and end the year with a CET1 ratio of roughly 10.6% to 10.7%.
Private Bank and Efficiency Initiatives
The private bank continued to be a major growth initiative, with deposits increasing to $18.5 billion, loans reaching $11.7 billion and client assets rising $1.2 billion to $12.4 billion. Brendan Coughlin, Citizens’ president, said the unit has expanded from roughly 150 employees in 2023 to nearly 700, adding teams and offices in markets including Tampa, Philadelphia, Southern California and Florida.
Management expects wealth management to become a larger contributor to private-bank revenue over time. Van Saun said the business is expected to remain within a 20% to 25% return range, though its return profile could tighten somewhat as lending and continued expansion require additional capital.
Citizens also reiterated its targets for its Reimagine the Bank efficiency program. The company expects to exit 2026 with about $100 million of annualized pretax benefits, more than double that amount to $225 million by the end of 2027, and reach at least $450 million by the end of 2028.
For the fourth quarter, Citizens expects noninterest income to increase 4% to 5%, expenses to rise about 1%, and charge-offs to be stable to modestly lower. Management said the outlook would place the company on track for more than 600 basis points of positive operating leverage for the full year and supports its goal of reaching a 16% to 18% ROTCE range by the end of 2027.
About Citizens Financial Group (NYSE:CFG)
Citizens Financial Group, Inc is a bank holding company headquartered in Providence, Rhode Island. Its principal subsidiary, Citizens Bank, provides banking and financial services to individuals, families, businesses and institutions through branches, digital channels and other delivery platforms.
The company’s consumer banking activities include checking and savings accounts, residential mortgages, home equity lending, credit cards, personal loans and other lending products. Through its commercial banking operations, Citizens provides business loans, commercial real estate financing, treasury management, capital markets services and other solutions for companies and institutional clients.
