Citizens reports strong growth
and record earnings
Results reflect strong organic loan and deposit growthPROVIDENCE, R.I. (August 4, 2006) - Citizens Financial Group, Inc. (“Citizens”) today announced record earnings of $1.45 billion for the first half of 2006, an increase of 4% over the first half of 2005.
“We continue to grow our personal and commercial banking business, as well as our other business segments, including mortgage, credit card services, and equipment leasing,” said Lawrence K. Fish, Chairman and CEO of Citizens Financial Group, Inc. “We have made especially good progress in growing our small business and corporate lending, while continuing to expand our 13-state retail branch footprint. Our supermarket banking franchise, now No. 2 in the country, continues to grow through a partnership with Stop & Shop Supermarkets that will add 75 new in-store branches across New York State over the next three years.”
“We are growing our business in the face of the impact that the sustained flattening of the interest rate yield curve is having on the entire banking industry,” Fish said.
A variety of business lines are contributing to Citizens’ overall growth. The number of retail credit card accounts rose by 23%. RBS Lynk, Citizens’ cards-related merchant services business, has grown its customer base significantly and now serves 17% more merchants than it did a year ago. In the commercial area, Citizens’ business customer base rose to 460,000; co-operation between Citizens and RBS Corporate Markets continues to add new accounts.
Citizens’ earnings are based on International Financial Reporting Standards and are as reported by its parent company, The Royal Bank of Scotland Group plc (“RBS”), and reflect pre-tax operating profit defined as earnings before taxation, amortization of intangibles, and acquisition costs
Average loans increased by 13% with personal lending rising by 11% and corporate lending by 14% (excluding finance leases). Citizens made good progress in the credit card business while maintaining credit quality. Average customer deposits increased by 5%, but as interest rates have risen, personal and business customers have moved balances from liquid savings to higher cost deposits. The further flattening of the US yield curve and its impact on customer behavior has led to margin compression, offsetting the good growth in loans and deposits and leaving net interest income at $1.92 billion.
Non-interest income rose by 11% to $1.09 billion, benefiting from higher core banking income, card income and gains. Business and corporate fee income rose across the board, particularly in foreign exchange, interest rate derivatives and cash management.
Total operating expenses were up 3% to $1.44 billion, as Citizens enhanced efficiency while supporting higher business volumes and investing for future growth, in areas such as mid-corporates, asset finance, credit cards and merchant services, as well as in the core branch network.
Provision for losses increased by 11% to $128 million, in line with recent asset growth. Credit quality overall remains strong; both in absolute terms and relative to peer group. Citizens’ consumer portfolios have an average FICO score in excess of 700, and 95% of consumer lending is secured.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is a commercial bank holding company headquartered in Providence, R.I. It has more than 1,600 branches, approximately 3,200 ATMs and approximately 26,000 employees. It operates its 13-state branch network in Connecticut, Delaware, Illinois, Indiana, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Vermont, and has a retail and commercial presence in over 40 states. Citizens is the eighth-largest commercial banking company in the United States ranked by deposits as of March 31, 2006. Citizens is owned by RBS.
|