SoFi CEO enters prepaid forward contract on 1.5 million shares
On Thursday, JPMorgan reiterated its Neutral rating on Citizens Financial Group (NYSE:CFG) with a steady price target of $43.00. The financial institution’s first-quarter core earnings per share (EPS) were reported at $0.76, while the actual EPS was slightly higher at $0.77. According to InvestingPro data, the bank currently trades at a P/E ratio of 11.5x and offers a substantial 4.74% dividend yield, having maintained dividend payments for 12 consecutive years. According to JPMorgan, Citizens Financial has been actively reshaping its balance sheet by running off or selling loan categories that were previously areas of growth. The firm noted that Citizens Financial has been effectively managing its expenses, which may indicate that the costs associated with the Top program are now a standard part of the bank’s expense structure. With a market capitalization of $15.5 billion, the bank has shown mixed results, as InvestingPro data reveals 8 analysts have recently revised their earnings estimates downward for the upcoming period.
The analyst from JPMorgan highlighted the current global economic challenges, including tariff-related uncertainties, which are affecting all banks, including Citizens Financial. The bank is expected to face further impact from these issues, particularly in capital markets activities, which are a significant source of its fee income. This challenging environment has contributed to the stock’s significant decline, with InvestingPro showing a year-to-date return of -18.26% and a return on common equity of 6%. For deeper insights into Citizens Financial’s performance metrics and future outlook, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Despite these economic concerns and the pressure from sustained high cumulative inflation, Citizens Financial has not built a cushion in its capital ratios above proforma requirements, including other comprehensive income (OCI). JPMorgan pointed out that among the banks they cover, Citizens Financial has the smallest cushion, at just 10 basis points.
The firm also drew parallels between the current situation and the bank’s approach during the COVID-19 pandemic, when Citizens Financial maintained a low loan loss reserve ratio. JPMorgan suggested that the bank’s valuation could benefit from building a buffer in its capital ratios until there is a material improvement in return on tangible common equity (ROTCE). The analysts believe that taking such a step could potentially enhance the management’s credibility in the eyes of investors and stakeholders.
In other recent news, Citizens Financial Group reported its first-quarter 2025 earnings, with an earnings per share (EPS) of $0.77, exceeding analyst expectations of $0.75. The company’s revenue matched forecasts at $1.94 billion. Citizens Financial Group executed $200 million in stock buybacks, returning a total of $386 million to shareholders. The company also expanded its Net Interest Margin (NIM) by 3 basis points to 2.9%. Strategic initiatives included the sale of $1.9 billion in non-core student loans and the launch of new credit card products. The bank maintained a strong balance sheet with a Common Equity Tier 1 (CET1) ratio of 10.6%. CFG reaffirmed its full-year EPS estimate and projected an increase in NIM to between 3.05% and 3.10% by year-end. The company anticipates net interest income growth of 3-5%, supported by the expansion of private banking services.
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