CITIZENS FINANCIAL GROUP INCRI
For the period ended Dec 31, 2024. Filed Feb 13, 2025.
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FY2024 · Filed Feb 13, 2025
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Net Interest Income
Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of our net interest income is primarily a function of the difference between the effective yield on our average interest-earning assets and the effective cost of our interest-bearing liabilities. Factors that influence our net interest income include, but are not limited to, the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to the “Market Risk” and “Risk Governance” sections of this report.
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The following table presents the major components of our net interest income. Average balance represents amortized cost, excluding the unamortized basis adjustments related to the transfer of certain HTM securities from AFS, and LHFS. The yield/rate is based on annualized interest income or expense for the periods presented and includes the impact of hedging activities associated with the respective asset and liability categories.
| Table 2: Major Components of Net Interest Income | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year Ended December 31, | |||||||||||||
| 2024 · 2023 · Change | |||||||||||||
| (dollars in millions) · AverageBalance · Income/Expense · Yield/Rate · AverageBalance · Income/Expense · Yield/Rate · AverageBalance · Yield/Rate (bps) | |||||||||||||
| Assets | |||||||||||||
| Interest-bearing cash and due from banks and deposits in banks | $9,566 | $503 | 5.17% | $8,531 | $451 | 5.22% | $1,035 | (5) bps | |||||
| Taxable investment securities | 44,627 | 1,658 | 3.71 | 39,437 | 1,162 | 2.94 | 5,190 | 77 | |||||
| Non-taxable investment securities | 1 | — | 2.60 | 2 | — | 2.68 | (1) | (8) | |||||
| Total investment securities | 44,628 | 1,658 | 3.71 | 39,439 | 1,162 | 2.94 | 5,189 | 77 | |||||
| Commercial and industrial | 44,174 | 2,333 | 5.20 | 49,998 | 3,002 | 5.92 | (5,824) | (72) | |||||
| Commercial real estate | 28,430 | 1,795 | 6.21 | 29,206 | 1,804 | 6.09 | (776) | 12 | |||||
| Total commercial | 72,604 | 4,128 | 5.60 | 79,204 | 4,806 | 5.99 | (6,600) | (39) | |||||
| Residential mortgages | 31,916 | 1,184 | 3.71 | 30,660 | 1,052 | 3.43 | 1,256 | 28 | |||||
| Home equity | 15,603 | 1,231 | 7.89 | 14,475 | 1,092 | 7.54 | 1,128 | 35 | |||||
| Automobile | 6,404 | 274 | 4.27 | 10,374 | 429 | 4.13 | (3,970) | 14 | |||||
| Education | 11,340 | 613 | 5.41 | 12,333 | 621 | 5.04 | (993) | 37 | |||||
| Other retail | 4,837 | 518 | 10.72 | 5,171 | 489 | 9.46 | (334) | 126 | |||||
| Total retail | 70,100 | 3,820 | 5.45 | 73,013 | 3,683 | 5.04 | (2,913) | 41 | |||||
| Total loans and leases | 142,704 | 7,948 | 5.52 | 152,217 | 8,489 | 5.53 | (9,513) | (1) | |||||
| Loans held for sale(1) | 1,174 | 77 | 6.51 | 1,499 | 102 | 6.75 | (325) | (24) | |||||
| Interest-earning assets | 198,072 | 10,186 | 5.10 | 201,686 | 10,204 | 5.02 | (3,614) | 8 | |||||
| Noninterest-earning assets | 20,952 | 20,535 | 417 | ||||||||||
| Total assets | $219,024 | $222,221 | ($3,197) | ||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||
| Checking with interest | $32,943 | $491 | 1.49% | $33,960 | $446 | 1.31% | ($1,017) | 18 | |||||
| Money market | 53,053 | 1,705 | 3.21 | 51,178 | 1,494 | 2.92 | 1,875 | 29 | |||||
| Savings | 27,100 | 476 | 1.76 | 29,266 | 433 | 1.48 | (2,166) | 28 | |||||
| Time | 24,967 | 1,153 | 4.62 | 19,320 | 772 | 4.00 | 5,647 | 62 | |||||
| Total interest-bearing deposits | 138,063 | 3,825 | 2.77 | 133,724 | 3,145 | 2.35 | 4,339 | 42 | |||||
| Short-term borrowed funds | 252 | 15 | 5.73 | 746 | 43 | 5.70 | (494) | 3 | |||||
| Long-term borrowed funds | 13,831 | 713 | 5.15 | 15,853 | 775 | 4.86 | (2,022) | 29 | |||||
| Total borrowed funds | 14,083 | 728 | 5.16 | 16,599 | 818 | 4.89 | (2,516) | 27 | |||||
| Total interest-bearing liabilities | 152,146 | 4,553 | 2.99 | 150,323 | 3,963 | 2.63 | 1,823 | 36 | |||||
| Noninterest-bearing demand deposits | 36,457 | 41,581 | (5,124) | ||||||||||
| Other noninterest-bearing liabilities | 6,466 | 6,711 | (245) | ||||||||||
| Total liabilities | 195,069 | 198,615 | (3,546) | ||||||||||
| Stockholders’ equity | 23,955 | 23,606 | 349 | ||||||||||
| Total liabilities and stockholders’ equity | $219,024 | $222,221 | ($3,197) | ||||||||||
| Interest rate spread | 2.11% | 2.39% | (28) | ||||||||||
| Net interest income and net interest margin | $5,633 | 2.84% | $6,241 | 3.09% | (25) | ||||||||
| Net interest income and net interest margin, FTE(2) | $5,650 | 2.85% | $6,258 | 3.10% | (25) | ||||||||
| Memo: Total deposits (interest-bearing and noninterest-bearing demand) | $174,520 | $3,825 | 2.19% | $175,305 | $3,145 | 1.79% | ($785) | 40 bps | |||||
(1) See Note 1 for information regarding updates to the Consolidated Balance Sheets during 2024.
(2) Net interest income and net interest margin is presented on a FTE basis using the federal statutory tax rate of 21%. The FTE impact is predominantly attributable to commercial and industrial loans for the periods presented.
Net interest income decreased $608 million, or 10%, compared to 2023, reflecting lower net interest margin and a decrease of 2% in average interest-earning assets.
Net interest margin on a FTE basis decreased 25 basis points compared to 2023, reflecting higher funding and swap costs and the impact of building liquidity, partially offset by higher interest-earning-asset yields and the benefit of Non-Core portfolio runoff.
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Average interest-earning assets decreased $3.6 billion compared to 2023, driven by a decline in total loans and leases, partially offset by an increase in investment securities and cash held in interest-bearing deposits.
Average deposits were stable compared to 2023.
Average total borrowed funds decreased $2.5 billion compared to 2023, reflecting a decline in FHLB advances driven by Non-Core portfolio runoff, partially offset by a remix of funding to long-term senior debt and secured borrowings collateralized by loans.
| Table 3: Changes in Net Interest Income Due to Average Volume and Average Rate | |||
|---|---|---|---|
| Year Ended December 31, | |||
| 2024 Versus 2023 | |||
| (dollars in millions) | Average Volume(1) | Average Rate(1) | Net Change |
| Interest Income | |||
| Interest-bearing cash and due from banks and deposits in banks | $55 | ($3) | $52 |
| Taxable investment securities | 151 | 345 | 496 |
| Non-taxable investment securities | — | — | — |
| Total investment securities | 151 | 345 | 496 |
| Commercial and industrial | (342) | (327) | (669) |
| Commercial real estate | (48) | 39 | (9) |
| Total commercial | (390) | (288) | (678) |
| Residential mortgages | 44 | 88 | 132 |
| Home equity | 85 | 54 | 139 |
| Automobile | (164) | 9 | (155) |
| Education | (50) | 42 | (8) |
| Other retail | (32) | 61 | 29 |
| Total retail | (117) | 254 | 137 |
| Total loans and leases | (507) | (34) | (541) |
| Loans held for sale(2) | (22) | (3) | (25) |
| Total interest income | ($323) | $305 | ($18) |
| Interest Expense | |||
| Checking with interest | ($14) | $59 | $45 |
| Money market | 55 | 156 | 211 |
| Savings | (32) | 75 | 43 |
| Time | 226 | 155 | 381 |
| Total interest-bearing deposits | 235 | 445 | 680 |
| Short-term borrowed funds | (28) | — | (28) |
| Long-term borrowed funds | (116) | 54 | (62) |
| Total borrowed funds | (144) | 54 | (90) |
| Total interest expense | 91 | 499 | 590 |
| Net interest income | ($414) | ($194) | ($608) |
(1)Volume and rate changes are allocated on a consistent basis using the respective percentage changes in average balances and average rates.
(2) See Note 1 for information regarding updates to the Consolidated Balance Sheets during 2024.
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