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November 4, 2025 • 4 min read
Citizens Financial Group (CFG), one of the nation's largest regional banks, recently released its financial results for the third quarter of 2025. In this post, we'll dive into the numbers from their latest 10-Q filing with the SEC to understand the bank's performance and what it signals about its financial health.
A great way to visualize a company's financial performance is by looking at how its revenues flow through various costs to arrive at the final profit. The following flow diagram illustrates this for CFG's third quarter.
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You'll notice an item in the diagram for unallocated revenue. For the third quarter, this amounted to a negative $186 million. This figure largely represents the results from the bank's treasury and balance sheet management activities, including wholesale funding costs and the performance of its investment portfolios, which are not assigned to its main Consumer or Commercial Banking segments.
Citizens' revenue story this quarter is one of strength on two fronts: interest and noninterest income.
Net interest income, the core profit engine for most banks, rose to $1.49 billion for the quarter, up from $1.37 billion in the same period last year. This was supported by an improvement in the Net Interest Margin (NIM), which expanded to 2.99% from 2.76%. The NIM measures the difference between the interest a bank earns on its assets (like loans) and what it pays on liabilities (like deposits). A wider margin generally signals greater profitability from its core lending and borrowing activities.
However, the real standout was noninterest income, which surged 18% year-over-year to $630 million. This growth was supercharged by a few key areas:
While total expenses did increase by 6% to $1.34 billion, driven mainly by hiring for its Private Bank and strong performance-related pay in Capital Markets, this was outpaced by revenue growth. This positive trend is reflected in the bank's efficiency ratio, a key metric that measures noninterest expenses as a percentage of total revenue. A lower number is better.
For the quarter, CFG's efficiency ratio improved significantly to 63.03%, down from 66.23% in the third quarter of 2024. This demonstrates that the bank is effectively managing its costs relative to the income it's generating.
In a fluctuating economic environment, a bank's credit quality is always under the microscope. Citizens' report shows a stable and slightly improving picture.
The provision for credit losses—money set aside for potential loan defaults—was $154 million for the quarter. This is a modest decrease from the $172 million set aside in the same quarter last year, suggesting confidence in the loan portfolio's health.
Other key credit metrics support this view:
Citizens Financial Group's third quarter of 2025 paints a picture of a bank executing well on its strategic initiatives. The impressive growth in fee-based income from capital markets and wealth management is diversifying its revenue streams and complementing its solid net interest income. Coupled with improving efficiency and stable credit quality, the bank appears to be on solid footing.
Looking ahead, like its peers, CFG will need to navigate the persistent challenges of the broader interest rate environment and maintain its credit discipline, particularly within its commercial loan portfolio. However, the strong performance this quarter suggests its strategic investments are beginning to yield significant returns.
Last updated: November 4, 2025