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Citizens reports solid earnings; up 2%
Providence, R.I. (August 3, 2007) Citizens Financial Group, Inc. (“Citizens”) today announced earnings of $1.48 billion for the first half of 2007, an increase of 2% over the first half of 2006.
“We are particularly pleased with our performance and growth in corporate and commercial banking, especially in the Midwest where we’ve had success in attracting new mid-corporate customers,” said Stephen D. Steinour, President and CEO of Citizens Financial Group, Inc. “Our cards-related merchant services business has also made good progress with a significant increase in our customer base.”
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.
Net interest income totaled $1.93 billion. Average loans and advances to customers increased by 4%, with strong growth in corporate and commercial lending offsetting weaker demand for mortgage and auto loans. Average corporate and commercial loans excluding finance leases increased by 12%, reflecting Citizens’ success in adding new mid-corporate customers and increasing its total number of business customers by 3% to 473,000, with particularly good growth in the Midwest.
Average customer deposits increased by 1%. There has been further migration from low-cost checking accounts and liquid savings to higher-cost term and time deposits. Notwithstanding this migration, Citizens stabilized its net interest margin at 2.75% in the first half of 2007, the same level recorded in the first half of 2006 but six basis points higher than in the second half of 2006.
Non-interest income rose by 5% to $1.15 billion. Business and corporate non-interest income rose strongly, with good results especially in leasing, interest rate derivatives and cash management where enhanced cooperation with RBS Corporate Markets has resulted in increased activity. Good progress was also made in credit card issuing, where we increased our customer base by 21%, and in merchant acquiring, where RBS Lynk achieved significant growth, processing 30% more transactions than in 2006 and expanding its merchant base by 8%.
Effective cost control kept total expenses flat, despite continued investment in growth opportunities including mid-corporate banking, contactless debit cards, and merchant acquiring.
The increasing proportion of commercial lending in our portfolio has contributed to an increase in provision for losses to $163 million. This reflects the growth in the portfolio over the recent past and still represents just 0.29% of loans and advances to customers, on an annualized basis, illustrating the quality of Citizens’ portfolio. Non-performing loans represent 0.35% of loans and advances, up slightly from 0.32% in 2006.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is a commercial bank holding company headquartered in Providence, R.I. It has more than 1,600 branches and approximately 3,300 ATMs. It operates its 13-state branch network in Connecticut, Delaware, Illinois, Indiana, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Vermont, and has a retail and commercial presence in over 40 states. Citizens is one of the ten largest commercial banking companies in the United States ranked by assets and deposits as of March 31, 2007. Citizens is owned by RBS.
About The Royal Bank of Scotland Group
The Royal Bank of Scotland Group is one of the world's leading financial services companies, providing a range of retail and corporate banking, financial markets, consumer finance, insurance, and wealth management services. RBS Group serves more than 36 million personal customers world-wide and employs more than 135,000 people, including nearly 30,000 in the United States.
CITIZENS FINANCIAL GROUP, INC.
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First Half
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First Half
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2007
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2006
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$m
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$m
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Net interest income
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1,931
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1,924
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Non-interest income
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1,153
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1,094
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Total income
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3,084
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3,018
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Operating expense
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- staff costs
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746
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759
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- other
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693
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677
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Total operating expense
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1,439
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1,436
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Operation profit before provisions
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1,645
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1,582
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Provisions
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163
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128
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Operating profit before income taxes
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1,482
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1,454
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Jun 30
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Jun 30
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2007
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2006
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Period end:
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$bn
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$bn
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Total assets
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160.3
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164.2
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Loans and advances to customers - gross:
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- mortgages
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18.5
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19.4
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- home equity
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36.2
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33.1
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- other comsumer
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22.7
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24.5
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- corporate and commercial
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34.6
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32.2
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Customer deposits
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106.1
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111.8
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Customer deposits (excluding wholesale funding)
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104.0
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105.2
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Note:
Citizens' results are as reported by its parent company, The Royal Bank of Scotland Group plc, and are based on International Financial Reporting Standards. The results include the asset finance business of The Royal Bank of Scotland plc, New York Branch.
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