Citizens’ Net Interest Income Growth Slows

The Tip Desk · October 18, 2026 · 3 min read

Citizens’ third-quarter net interest income reached $1.675 billion, but sequential growth slowed and fees reversed their second-quarter gain.

Citizens Financial Group (CFG) lost some of its second-quarter revenue momentum as net interest income growth slowed and fees retreated. Net interest income increased 2.7% sequentially to $1.675 billion in the third quarter of 2026. That followed growth of 4.4% in the second quarter and 1.6% in the first, ending the acceleration while extending the increase in interest income after funding costs.

The margin continued to expand, though funding became more expensive. Net interest margin on a fully taxable-equivalent basis increased 2 bps sequentially to 3.19%. Citizens attributed the improvement to lower terminated-swap impacts and fixed-rate asset repricing, partially offset by higher funding costs. Total deposit costs reached 1.66%. The repricing benefit therefore continued to support interest earnings even with funding costs moving in the opposite direction.

Loan growth provided another source of interest-earning assets. Average loans rose 1% QoQ to $147.4 billion, with Citizens identifying the Private Bank and retail businesses as the leaders. Average commercial loans and leases were $76.9 billion, while average retail loans were $70.4 billion. Citizens said Private Bank, home-equity and mortgage growth outweighed commercial real-estate paydowns, lower commercial credit-line utilization and runoff of its Non-Core portfolio in period-end lending.

The deposit franchise showed a different mix across businesses. Period-end deposits were $185.2 billion, including $18.5 billion at the Private Bank. Growth in Private Bank and Commercial deposits was largely offset by a decrease in Consumer deposits. The period-end loan-to-deposit ratio was 80.0%, placing the funding discussion alongside continued loan growth rather than a broad expansion of the deposit base.

Fees supplied the clearest reversal from the previous quarter. Noninterest income fell 1% sequentially to $647 million after an 8% increase in the second quarter. Wealth remained an exception, generating record fees of $109 million. That result was driven primarily by higher advisory fees, giving the wealth franchise a different trajectory from the broader fee business.

Capital markets fees were $149 million. Lower loan-syndication and debt- and equity-underwriting fees were largely offset by higher merger-and-acquisition fees. Mortgage banking generated $35 million, with a $13 million decline in net mortgage-servicing-rights valuation partially offset by higher servicing revenue. Those details located the fee weakness in transaction activity and mortgage valuations, while wealth supplied a counterweight.

Expenses left room for the higher revenue base to reach earnings. Noninterest expense was $1.393 billion and pre-provision profit was $929 million. Continued Private Bank and Wealth investment, technology costs and medical benefits were among the expense drivers. Net income was $636 million, or $1.41 a share; discrete tax benefits also contributed to the quarter’s earnings. The operating result thus combined continued investment with a larger pre-provision earnings base.

Credit costs offered no comparable break in direction. Net charge-offs held at 37 bps sequentially, while the provision for credit losses was $125 million. Allowance coverage stood at 1.47% of loans. The coverage movement reflected an improved loan mix, including lower general-office and multifamily commercial real-estate balances and originations in commercial and industrial lending and retail real-estate-secured loans with lower loss content.

Capital presented a split picture. Tangible book value fell 6.6% QoQ to $35.78 a share, which Citizens attributed to higher long-term rates affecting its securities and swap portfolios. The common equity tier 1 capital ratio was a preliminary 10.5%.

The board nevertheless raised the quarterly common dividend 13% to $0.52 a share, payable in November. It also expanded repurchase capacity to $1.95 billion. Those decisions established a larger capacity for shareholder distributions beyond the quarter’s earnings, even after the decline in tangible book value.

Source: Citizens Financial Group quarterly earnings releases.