Citizens Financial Earnings: Still Hard to Tell Where NII Will Bottom, but We Don’t Think It's Far

No-moat Citizens Financial Group reported third-quarter earnings per share of $0.85, missing FactSet consensus of $0.91 but roughly in line with our estimate of $0.87. We are seeing continued pressure on net interest income, or NII, due to persistent funding cost headwinds and the decrease in the overall loan book. Deposit costs shot up a little bit higher than our forecasts, but absolute magnitude of change is slowing as rate hikes are also slowing. Arguably the biggest weakness in current results was fees, driven primarily by weaker capital markets fees. These fees are cyclical and we remain in a tough environment, so we would not read too much into this. Much of the updated guidance was also not far off from previous expectations, with hints at flat 2024 expenses essentially in line with our previous expectations, although it looks like fees will remain somewhat weak for the foreseeable future.