CFG Q1 Deep Dive: Loan Book Shift, Private Bank Growth, and Macro Uncertainty Shape Outlook

June 24, 2025 at 02:11 AM EDT

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Regional banking company Citizens Financial Group (NYSE: CFG) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 1.2% year on year to $1.94 billion. Its non-GAAP profit of $0.77 per share was 2.7% above analysts’ consensus estimates.

Is now the time to buy CFG? Find out in our full research report (it’s free).

Citizens Financial Group (CFG) Q1 CY2025 Highlights:

Revenue: $1.94 billion vs analyst estimates of $1.93 billion (1.2% year-on-year decline, in line)
Adjusted EPS: $0.77 vs analyst estimates of $0.75 (2.7% beat)
Market Capitalization: $18.43 billion

StockStory’s Take

Citizens Financial Group’s first quarter results met Wall Street’s revenue expectations, but the market reacted negatively following a year-over-year sales decline and a notable shortfall in adjusted operating income. Management pointed to incremental expansion in net interest margin, stable credit trends, and ongoing cost discipline as key drivers of the quarter. CEO Bruce Van Saun highlighted the accelerated runoff of non-core assets, including a $1.9 billion student loan sale, as a move to redeploy capital toward higher-return initiatives. While fee income remained resilient despite market uncertainty, capital markets activity was tempered by delayed deal execution.

Looking ahead, management reaffirmed its full-year earnings guidance but acknowledged mounting risks from persistent macroeconomic uncertainty and potential delays in capital markets recovery. Executives cited strong pipelines for mergers and acquisitions, ongoing investment in the Private Bank, and a focus on deposit cost management as critical levers for future performance. CFO John Woods stated, “Net interest margin is projected to rise steadily through the year, driven by time-based benefits and improved deposit mix.” The company is prepared to adjust share repurchases or expenses if headwinds intensify, but expects loan growth and fee income to improve if economic conditions stabilize.

Key Insights from Management’s Remarks

Citizens Financial Group’s leadership credited first quarter results to steady progress in its Private Bank, strong deposit growth, and strategic asset repositioning, while market uncertainty moderated fee-based revenue.

Private Bank momentum: The Private Bank segment saw robust growth, with deposits rising by $1.7 billion and assets under management reaching $5.2 billion, supported by new team additions in key markets such as Florida, Southern California, and New Jersey. Management believes this segment will continue to contribute meaningfully to earnings.
Non-core asset rundown: The bank executed an agreement to sell $1.9 billion in purchased student loans from its non-core portfolio, accelerating the runoff of lower-yielding assets. Management expects this will free up capital for higher-return uses, benefiting net interest margin and profitability.
Deposit franchise strength: Citizens grew low-cost deposits in a seasonally weak quarter, with stable retention rates in certificates of deposit (CDs) despite yield reductions. The bank’s retail deposit base remains higher than peers, supporting lower funding costs.
Capital markets softness and backlog: Fee revenue from capital markets was subdued due to delayed deal activity caused by macro uncertainty and regulatory slowdowns. However, management reported record pipelines in both number and dollar value of pending transactions, anticipating a potential pickup if uncertainty diminishes.
Expense control and investment: Operating expenses were tightly managed, with increases mainly due to seasonal salary and benefit costs. Strategic investments continued in digital capabilities, wealth management, and payments, while the company’s ongoing TOP 10 cost transformation program provides flexibility to adjust spending if conditions warrant.

Drivers of Future Performance

Management’s outlook for the rest of the year is shaped by expectations of gradually rising net interest margin, strategic redeployment of capital, and potential improvement in capital markets activity if macro headwinds subside.

Net interest margin expansion: The company projects net interest margin will continue to increase in 2025 and beyond, primarily driven by the runoff of non-core assets, improved deposit mix, and limited sensitivity to changes in interest rates due to effective hedging strategies.
Loan and fee growth potential: Executives expect renewed loan demand in the second half of the year, especially if business confidence returns and delayed M&A transactions close. The Private Bank is positioned for further growth, while new credit card products and enhanced wealth offerings could support fee income.
Macroeconomic and regulatory risks: Management noted that persistent market volatility, slower-than-anticipated loan growth, or delays in capital markets could pressure results. However, they highlighted levers such as cost containment, additional share repurchases, and further deposit repricing to mitigate these risks.

Catalysts in Upcoming Quarters

Over the coming quarters, the StockStory team will watch (1) whether Citizens can convert its record M&A and capital markets pipelines into closed transactions as macro conditions evolve, (2) the pace of Private Bank deposit and loan growth relative to non-core asset runoff, and (3) ongoing deposit cost trends amid industry competition and changing rate dynamics. Execution on expense discipline and the rollout of new consumer banking products will also be key markers of progress.

Citizens Financial Group currently trades at $42.75, up from $36.07 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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