CITIZENS FINANCIAL GROUP INC/RI

RESULTS OF OPERATIONS

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 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 our 2024 Form 10-K.

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.

(1) Net interest income and net interest margin on an FTE basis are non-GAAP financial measures. See “Non-GAAP Financial Measures” for more information.

Net interest income decreased $51 million, or 4%, for the three months ended March 31, 2025, compared to the same period in 2024, driven primarily by a decrease of 3% in average interest-earning assets, partially offset by a decrease of 3% in average interest-bearing liabilities.

Net interest margin on an FTE basis decreased 1 basis point for the three months ended March 31, 2025, compared to the same period in 2024, as the impact of variable-rate asset repricing was largely offset by the benefit of lower funding costs, Non-Core portfolio runoff and fixed-rate asset repricing.

Average interest-earning assets decreased $5.0 billion for the three months ended March 31, 2025, compared to the same period in 2024, driven by a decline in total loans and leases and cash held in interest-bearing deposits, partially offset by an increase in investment securities.

Average deposits decreased $3.4 billion for the three months ended March 31, 2025 compared to the same period in 2024, driven by lower commercial deposits and a reduction in higher-cost Treasury deposits, partially offset by an increase in consumer deposits driven by the Private Bank.

Average total borrowed funds decreased $830 million for the three months ended March 31, 2025, compared to the same period in 2024, reflecting a decline in FHLB advances and auto collateralized borrowings, given runoff of the Non-Core portfolio, partially offset by an increase in senior debt.

Noninterest Income

(1) Includes bank-owned life insurance income and other income for all periods presented.

The primary drivers for the change in noninterest income for the three months ended March 31, 2025, compared to the same period in 2024, are described below.

•Service charges and fees increased driven primarily by higher cash management and overdraft fees.

•Wealth fees reflect growth in Private Bank assets under management.

•Mortgage banking fees increased driven by higher MSR valuation, net of hedging.

•Capital markets fees decreased reflecting lower M&A fees, partially offset by higher loan syndication and bond underwriting fees.

Noninterest Expense

The decrease in noninterest expense for the three months ended March 31, 2025, compared to the same period in 2024, was driven primarily by other operating expense associated with FDIC deposit insurance, reflecting $35 million for CBNA’s special assessment recognized in 2024, and lower fraud losses.

For more information regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in our 2024 Form 10-K.

Provision for Credit Losses

The provision for credit losses is the result of a detailed analysis performed to estimate our ACL. The total provision for credit losses includes the provision for loan and lease losses and the provision for unfunded commitments. Refer to “Analysis of Financial Condition — Credit Quality” for more information.

Provision expense of $153 million for the three months ended March 31, 2025 decreased compared with a provision of $171 million for the same period in 2024, reflecting Non-Core portfolio runoff and improving loan mix.

Income Tax Expense

Income tax expense of $95 million decreased $1 million and our effective income tax rate of 20.3% decreased from 22.3% for the three months ended March 31, 2025, compared to the same period in 2024. These decreases are primarily driven by lower stock-related compensation. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusting for discrete items that occurred during the period.