Citizens reports increases in profit in 4Q and 2016

BRUCE VAN SAUN, chairman and CEO of Citizens Financial Group Inc., is shown in his office at 1 Citizens Plaza in Providence. Citizens  reported fourth-quarter profit growing 27.7 percent to $282 million, or 55 cents per share, and 2016 profit increasing 24.4 percent to $1.04 billion, or $1.97 per share. / PBN FILE PHOTO/ MICHAEL SALERNO
BRUCE VAN SAUN, chairman and CEO of Citizens Financial Group Inc., is shown in his office at 1 Citizens Plaza in Providence. Citizens reported fourth-quarter profit growing 27.7 percent to $282 million, or 55 cents per share, and 2016 profit increasing 24.4 percent to $1.04 billion, or $1.97 per share. / PBN FILE PHOTO/ MICHAEL SALERNO

PROVIDENCE – Citizens Financial Group Inc. on Friday reported fourth-quarter profit growing 27.7 percent to $282 million, or 55 cents per share, and 2016 profit increasing 24.4 percent to $1.04 billion, or $1.97 per share.

The company also continued to improve its operations, maintaining a 6 percent operating leverage for the year, excluding some restructuring charges.

“The commitment to positive operating leverage has powered our key measures,” said Bruce Van Saun, chairman and CEO, during a conference call with investors.

Total interest income and noninterest income grew 11.2 percent to $1.5 billion for the quarter ending Dec. 31, and rose 9.23 percent to $5.76 billion for the year. Interest income was fueled by strong growth in the bank’s loan portfolio, including an 11.8 percent increase in commercial loans totaling $51.7 billion compared with $46.2 billion in 2015. Residential mortgages likewise grew 13.5 percent to $15.1 billion, which was offset by declines in the company’s home equity segment of business.

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Providence-based Citizens, parent company of Citizens Bank, also realized a 51.6 percent increase in its student loan portfolio, which grew to $6.61 billion, signaling strong consumer response to the company’s student loan refinancing programs. Total 2016 loans and leases grew 8.71 percent to $107.7 billion compared with the prior-year period. The net-interest margin grew from 2.86 percent compared with 2.75 percent for 2015.

Citizens met or exceeded the majority of the goals it set for itself at the beginning of 2016, but fell short in a couple of areas, including noninterest income. The line item did increase thanks largely to a strong capital market fees and mortgage banking fees, but was offset by a reduction in credit-card fees and trust and investment services fees. Overhead costs remained relatively flat, as salary and employee benefits increased about $18 million. But the company continues to trim where possible, reducing its full-time employees by 75 people over the course of the year. The total workforce across the company’s footprint totaled 17,639 at year’s end.

Total assets increased 8.18 percent to $149.5 billion compared with $138.2 billion for 2015. Deposits, meanwhile, grew 7.09 percent to $109.8 billion.

The company is largely looking to stay the course in 2017, Van Saun said, setting various goals, including an 8-9 percent increase in net interest income, while keeping noninterest expense growth to between 3 percent and 3.5 percent.

“We enter 2017 with good momentum and believe we are well-positioned to capitalize on an improving economic and interest rate environment,” Van Saun said.

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