Citizens Financial Group, Inc.

Citizens reported second-quarter EPS of $1.30, up $0.17 or 15% from the first quarter and 41% year over year. ROTCE improved to 13.9% from 12.2% in the first quarter. NII increased 4.4% sequentially and 14% year over year, with net interest margin up 3 basis points linked quarter and 10 basis points in the first half of 2026. Non-interest income rose 8% linked quarter and 9% year over year, led by record capital markets revenue and record wealth results. Expenses were up about 1% sequentially, and the efficiency ratio improved to 61%. Net charge-offs were 37 bps, down from 39 bps in the prior quarter, and ACL coverage was 1.48%. CET1 ended at 10.4%, and the company returned $422 million to shareholders in the quarter, including $197 million in dividends and $225 million in buybacks. For the third quarter, management expects NII up 2.5%-3.5%, non-interest income up about 1%, expenses stable to slightly up, charge-offs stable to slightly down, and CET1 around 10.5% including about $125 million of share repurchases. For the full year, management said revenue is trending above its initial guidance range and that the company is on track to deliver over 600 basis points of positive operating leverage; it also reaffirmed a 16%-18% ROTCE target by end-2027. Management said it expects 2026 full-year NIM in the 322%-327% range and 2027 full-year NIM in the 330%-350% range.

Bruce Van Saun struck an upbeat tone, calling the quarter 'outstanding' and emphasizing that strong momentum is continuing across the franchise. He highlighted improving profitability, favorable credit trends, a robust balance sheet, and progress on strategic initiatives like the private bank, Reimagine the Bank, and the new NEXT branch strategy. He also said the firm feels set up for strong performance over the remainder of 2026 and the medium term.

Aunoy Banerjee focused on the financial drivers behind the quarter: record revenue, 600+ basis points of year-over-year positive operating leverage, and continued NIM expansion. He cited CET1 of 10.4%, $225 million of buybacks, $422 million returned to shareholders, and an efficiency ratio of 61%. He also gave specific program milestones, saying Reimagine the Bank should exit 2026 with about $100 million of annualized pre-tax benefit, double that in 2027, and reach about $450 million exiting 2028.

Analysts pressed on deposit costs, funding, and whether stronger loan growth and private bank deposits could pressure margins; management said the Q2 uptick was seasonal and tied to stronger loan growth, with deposit betas still expected to be stable and NIM supported by time-based benefits. Questions also focused on PPNR, and Bruce said he would not be surprised to see some upside versus Street expectations but stressed that higher expenses would mostly reflect incentive compensation tied to stronger revenue. On capital and the stress test, Bruce said the improved stress capital buffer does not change near-term management behavior, but it supports confidence that the bank may gradually operate closer to the lower end of its CET1 range over time.