Citizens Financial Group CFG reported second-quarter 2026 earnings per share (EPS) of $1.30, which surpassed the Zacks Consensus Estimate of $1.25. The metric rose 41% from the year-ago quarter.
CFG shares rose nearly 3.9% in the early trading session. A full day’s trading session will depict a clearer picture.
Results benefited from a rise in net interest income (NII) and non-interest income. Growth in loan and deposit balances and an improvement in credit quality were also encouraging. However, a rise in expenses and a weaker capital position were major headwinds.
Net income (GAAP basis) was $587 million, which rose 35% from the prior-year quarter.
CFG’s Q2 Revenues & Expenses Rise
Total revenues in the second quarter were $2.28 billion, which topped the Zacks Consensus Estimate of $2.24 billion. The top line rose 12% year over year.
Citizens Financial’s NII rose 14% year over year to $1.63 billion, primarily reflecting a higher net interest margin and a 5% increase in interest-earning assets.
The net interest margin (NIM) expanded 22 basis points year over year to 3.16%. This was mainly backed by benefits from terminated swaps, non-core runoff, fixed-rate asset repricing and lower funding costs, partially offset by lower asset yields.
Non-interest income increased 9% year over year to $652 million. The improvement was driven by higher capital markets fees, wealth fees, service charges and fees, foreign exchange and derivative products, and letter of credit and loan fees. This was partially offset by lower mortgage banking fees.
Non-interest expenses increased 6% year over year to $1.39 billion. The rise was primarily due to higher salaries and employee benefits, outside services costs, equipment and software expenses, and other operating expenses.
The efficiency ratio was 61.1% in the second quarter compared with 64.8% in the year-ago quarter. A fall in the efficiency ratio reflects improved profitability.
CFG’s Q2 Segment Results
Consumer Banking revenues were $1.66 billion, up 7% year over year. The segment’s net income increased 13% to $426 million.
Commercial Banking revenues rose 13% year over year to $759 million. The segment’s net income increased 36% to $280 million.
Other revenues were negative $138 million compared with negative $181 million in the prior-year quarter. The segment reported a net loss of $119 million, narrower than the year-ago loss of $146 million.
Citizens Financial’s Loan Balance & Deposits Up Sequentially
As of June 30, 2026, period-end total loans and leases were $147.5 billion, up 3% from the prior quarter, while total deposits rose 1% sequentially to $185.6 billion.
CFG’s Credit Quality Improves
As of June 30, 2026, Citizens Financial’s provision for credit losses was $134 million, which declined 18% from the year-ago quarter.
The allowance for credit losses decreased 1% year over year to $2.18 billion.
Net charge-offs decreased to $135 million from $167 million in the prior-year quarter.
Non-accrual loans and leases declined 6% year over year to $1.44 billion.
CFG’s Capital Position Weak
As of June 30, 2026, the common equity tier 1 (CET1) capital ratio was 10.4%, down from 10.6% in the prior-year quarter.
The total capital ratio was 13.6%, down from 13.8% in the year-ago quarter. The tier 1 leverage ratio was 9.2%, which decreased from 9.4% in the prior-year quarter.
Citizens Financial’s Share Repurchase Update
In the second quarter of 2026, CFG repurchased $225 million of common shares and paid $197 million in common dividends.
Citizens Financial’s Guidance
For the third quarter of 2026, CFG expects NII to increase 2.5-3.5% sequentially, while non-interest income is projected to rise approximately 1%.
Non-interest expenses are expected to remain stable or increase slightly from the second-quarter level.
Net charge-offs are projected to remain stable or decline slightly from 37 basis points in the second quarter. The CET1 ratio is expected to be approximately 10.5%.
The company plans to repurchase approximately $125 million worth of shares in the third quarter. The tax rate is expected to be nearly 22%.
For 2026, CFG expects NII growth to exceed its prior outlook of 10-12% from the $5.8 billion reported in 2025.
The company expects non-interest income growth to be toward the high end of its previously guided range of 6-8% from the $2.4 billion reported in 2025.
Adjusted non-interest expenses are projected to be slightly above the prior growth outlook of 4-5% from the $5.3 billion reported in 2025, reflecting strong revenue performance. Management expects more than 600 basis points of positive operating leverage in 2026.
The company expects NIM to be between 3.22% and 3.27% in the fourth quarter of 2026.
For the medium term, CFG raised its NIM target to 3.30-3.50% by the fourth quarter of 2027 from the previously stated 3.25-3.50%.
Our View on CFG
Citizens Financial’s solid second-quarter results reflect balanced growth in NII and fee income, along with improved efficiency and credit quality. Growth in loan and deposit balances was another positive.
The company continues to execute well on its strategic initiatives. Strong Private Bank growth, record Wealth fees, record second-quarter Capital Markets fees, progress on the Reimagine the Bank program and the successful launch of a new consumer mobile platform are expected to support its performance through 2026 and 2027. Management remains well positioned to achieve a return on average tangible common equity of 16-18% by the end of 2027. However, elevated expenses and a weaker capital position remain near-term headwinds.
Citizens Financial Group, Inc. Price, Consensus and EPS Surprise
Citizens Financial Group, Inc. price-consensus-eps-surprise-chart | Citizens Financial Group, Inc. Quote
Currently, Citizens Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Bank Stocks
Regions Financial RF is scheduled to release second-quarter 2026 earnings on July 17.
The consensus estimate for RF’s quarterly earnings has remained unchanged at 64 cents per share over the past seven days. This indicates a 6.7% increase from the year-ago reported level.
Truist Financial TFC is slated to report second-quarter 2026 results on July 17.
Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has remained unchanged at $1.08 per share. This indicates an 18.7% increase from the year-ago reported level.
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