Citizens Financial's Q4 2024: Conflicting Signals on NIM, Loan Growth, and Private Banking Strategy

Strong Financial Performance:
- Citizens Financial Group reported positive operating leverage of around 50 basis points in Q4.
- The financial results reflect good sequential revenue growth led by a 10 basis point expansion in NIM, driving positive operating leverage.
- Growth was supported by favorable credit trends, a robust balance sheet, and strategic initiatives like the Private Bank and BSO efforts.

Deposit and NIM Trends:
- Deposit costs improved better than the peer average, with a 31 basis point decline in interest-bearing deposit costs.
- The net interest margin increased by 10 basis points to 2.87%, reflecting benefits from noncore runoff and fixed rate asset repricing.
- The company executed a down rate playbook, reducing rates ahead of Fed cuts, contributing to positive deposit betas.

Credit and Liquidity Management:
- Credit trends favored with net charge-offs stable at 53 basis points and no surprises in charge-offs from CRE.
- General office criticized assets trended down, and nonaccrual loans were stable, indicating progression in working out CRE challenges.
- The company maintained strong liquidity with a pro forma category 1 LCR of 119%.

Shareholder Returns and Strategic Investments:
- Citizens Financial Group repurchased $225 million in shares in Q4 and $1.05 billion for the year, representing 6% of the beginning of year balance.
- Strategic investments were made in the Private Bank and commercial expansion, aiming for 5% accretive results in 2025.
- The company focused on disciplined investments to grow the Private Bank and New York City Metro franchise while managing expenses effectively.

ROTC and Outlook:
- The company expects solid growth in NII with modest net loan growth and improved positive operating leverage of 1.5%.
- Credit costs are projected to improve, with reserve releases anticipated throughout the year.
- Citizens Financial Group aims to maintain a CET1 ratio above the high end of the 10% to 10.5% range and manage share repurchases opportunistically.