Citizens Financial Reports 29% Profit Growth, Raises Quarterly Dividend 13%

Citizens Financial Group reported a 29% increase in third-quarter net income to $636 million on October 16, 2026, and raised its quarterly common-stock dividend by 13% to 52 cents per share. The Providence, Rhode Island-based lender benefited from stronger net interest income and a smaller provision for credit losses.

Profit rose from $494 million in the year-earlier quarter and $587 million in the second quarter. Diluted earnings per share reached $1.41, compared with $1.05 a year earlier and $1.30 in the preceding quarter. Net income available to common stockholders was $599 million, up from $457 million a year earlier.

The earnings announcement also brought a larger share-repurchase authorization. Citizens increased the capacity of its program to $1.95 billion, widening its scope for returning capital through buybacks alongside the higher dividend. The authorization permits future purchases; it is not an announcement that the bank has already repurchased that amount of stock.

Higher interest income offsets uneven fee performance

Citizens generated $2.322 billion in third-quarter revenue, up 10% from $2.118 billion a year earlier. Most of that increase came from net interest income, which rose 13% to $1.675 billion from $1.488 billion. That is the difference between the interest the bank earns on loans and other assets and the interest it pays on deposits and borrowing.

In its official third-quarter earnings announcement, Citizens reported a fully taxable-equivalent net interest margin of 3.19%, compared with 3.00% in the third quarter of 2025. The margin was also two basis points higher than in the second quarter. The bank cited fixed-rate assets repricing, reduced effects from previously terminated swaps, runoff of non-core loans and better funding costs in its explanation of the annual improvement.

Funding costs did not decline across every comparison. Interest-bearing deposit costs increased five basis points from the second quarter to 2.13%, and the total cost of deposits edged up three basis points to 1.66%. Even so, net interest income increased 2.7% sequentially, supported by a wider margin and 1% growth in average interest-earning assets.

Fee revenue was less consistent. Noninterest income reached $647 million, up 3% from a year ago but down 1% from the previous quarter. Wealth management fees set a record at $109 million, a year-over-year increase of $16 million, helped by client inflows and market appreciation. Capital-markets fees declined $17 million to $149 million, while mortgage banking fees fell $14 million to $35 million from the year-earlier quarter.

Costs rose more slowly than revenue. Noninterest expense totaled $1.393 billion, up 4% from the prior year but essentially flat from the second quarter. Citizens calculated positive operating leverage of 5.3% year over year, and its efficiency ratio improved to 60.0% from 63.0%. Pre-provision profit reached $929 million, up 19% from $783 million a year earlier, indicating that the earnings improvement was not solely the result of a smaller credit-loss charge.

The bank is still spending on expansion. Salaries and employee benefits were $45 million higher than a year earlier, reflecting continued development of its private banking and wealth businesses. Outside-services costs also increased, including spending associated with its Reimagine the Bank program. Citizens reported an effective tax rate of 20.9%, compared with 21.4% a year earlier.

Private bank gains stand out in a steadier deposit base

Citizens Private Bank ended September with $18.5 billion in deposits, about $750 million, or 4%, more than at the end of June. The figure was $6.1 billion higher than a year earlier. According to the company, the private banking operation contributed $0.16 to diluted earnings per share for the quarter, making it a material part of the bank’s reported performance.

Deposits at the group level changed little over the quarter. Total deposits stood at $185.2 billion on September 30, down approximately $392 million from June but up $5.2 billion, or 3%, from a year earlier. Growth in the private and commercial businesses was largely offset by lower consumer deposits. Average balances, at $183.7 billion, were essentially unchanged from the second quarter.

The mix of accounts shifted beneath those totals. Period-end money market deposits rose to $63.4 billion from $60.0 billion in June, while interest-bearing checking and savings balances declined. Those movements matter to the cost of funding the loan book, particularly when different deposit products are priced differently. The period-end loan-to-deposit ratio was 80.0%, versus 79.5% at midyear.

Loans and leases increased to $148.2 billion at quarter-end, about $736 million higher than in June and 5% above the year-earlier figure. Citizens pointed to private bank lending, home equity and residential mortgages as sources of growth. Commercial real estate paydowns, lower commercial line utilization and the continued runoff of older non-core loans offset some of the increase.

Credit provisions fall, although nonaccrual loans edge higher

The provision for credit losses fell to $125 million from $154 million in the third quarter of 2025, a decline of 19%. It was also lower than the $134 million set aside in the second quarter. Citizens associated the year-over-year reduction with improving credit trends, a changing loan mix and the shrinking non-core portfolio. A smaller provision provided an additional boost to reported profit.

Net charge-offs were $137 million, compared with $162 million a year earlier. At an annualized 0.37% of average loans and leases, the charge-off rate was unchanged from the second quarter and below the 0.46% recorded a year earlier. The company attributed the annual improvement in part to lower losses in commercial real estate and retail lending.

Some shorter-term measures were less favorable. Nonaccrual loans and leases increased 2% from June to $1.461 billion, with modest increases in commercial and industrial lending and residential mortgages. Nonaccrual balances represented 0.99% of loans and leases, up from 0.97% in June, although below 1.08% a year earlier.

The allowance for credit losses stood at $2.172 billion, equivalent to 1.47% of loans, compared with 1.48% in June and 1.56% a year earlier. Citizens said a reduction in certain general-office and multifamily commercial real estate exposures, along with growth in loan categories carrying lower expected loss content, influenced the coverage ratio. The lower provision and the change in reserves are related but distinct measures of credit performance.

Dividend rises as buyback capacity reaches $1.95 billion

The board declared a quarterly common dividend of $0.52 a share, six cents higher than the previous $0.46 payment. The new dividend is payable November 13, 2026, to shareholders of record at the close of business on October 30. At the newly declared rate, four equal quarterly payments would amount to $2.08 per share annually, though subsequent dividends remain subject to board approval.

Separately, the board added $1.3 billion to the $650 million of remaining capacity under its June 2025 repurchase authorization, bringing the total to $1.95 billion. During the third quarter, Citizens returned $322 million to shareholders, including $197 million in common dividends and $125 million through stock repurchases. Actual buybacks were below the $225 million completed in the second quarter, underscoring the distinction between authorization and purchases already made.

Capital indicators offered a more mixed picture. Citizens reported a common equity tier 1 capital ratio of 10.5% at September 30, up from 10.4% in June but below 10.7% a year earlier. The current-quarter regulatory ratios were described as preliminary in the earnings release furnished to the Securities and Exchange Commission. Return on average tangible common equity, a non-GAAP profitability measure, rose to 15.1% from 11.7% a year earlier.

Tangible book value per common share, however, declined 6.6% from the second quarter to $35.78, compared with $38.29 at the end of June. The bank attributed the drop to higher long-term interest rates affecting its investment-securities and swap portfolios. That balance-sheet valuation setback sits alongside the stronger earnings and higher shareholder payout reported for the quarter.