Citizens CEO Says Capital Markets, Wealth Driving Results

Citizens Financial Group Inc.’s results are being driven by growth of the bank’s wealth business and a revival in capital markets, including a comeback for mergers and acquisitions, Chief Executive Officer Bruce Van Saun said.

“There’s now a tick-up in deal flow, which we’ve been waiting for over three years to see,” Van Saun said in a Bloomberg Television interview Tuesday. “We’re having a great quarter in terms of our capital-markets revenues. The deal machine is going. The flywheel’s going.”

Earlier this month, Van Saun said Citizens is expecting an increase in net interest income, in line with expectations. That closely watched measure is the revenue collected from loan payments minus what depositors are paid, a key source of revenue for the company. The company also is seeing an increase in revenue from banking fees, leading to an overall growth in profitability.

Citizens shares are up 23% this year, compared with a 12% gain for the S&P 500 Financials Index. Analysts at Morgan Stanley expect the stock to continue to outperform, citing the bank’s efforts to expand its private bank business and the Federal Reserve’s expected rate cuts in coming quarters.

Providence, Rhode Island-based Citizens has projected that its wealth business — which Van Saun said he considers a “startup inside a 200-year-old bank” — will add 5% to its bottom line by this year, a target he expects to reach. That could reach 15% within three to five years at the current growth pace, said Van Saun, who’s been CEO of Citizens for 12 years.

“We had all the expenses Day One, and now revenues are now kind of exceeding those expenses,” Van Saun said. “We’ll be well over 5% of the bottom line this year.”

Some of the growth is the result of Citizens’ investment into Florida, Van Saun said, with the region’s growing population after the Covid-19 pandemic providing a new customer base for the bank’s commercial and consumer services. Citizens added a team of wealth advisers to its private-banking business in South Florida earlier this year, and has built out middle-market services catering to companies as well, he said, adding that the state has a lot of “tailwind.”