Moody's Affirms Citizens Financial Group's Ratings with Stable Outlook

Strategic Insights -

Citizens Financial Group, the parent company of Citizens Bank, has been reaffirmed by Moody's Investors Service with a stable outlook. The affirmation reflects progress made by the bank in strengthening its large regional bank franchise, solid funding profile, and improved liquidity. The outlook anticipates gradual profitability improvement, with net income to tangible assets expected to reach 1% by year-end 2025. Capitalization remains adequate, with a common equity Tier 1 (CET1) ratio of 10.6% as of Q2 2025.

Key Takeaways:

  • Citizens Financial Group's ratings affirmation reflects progress in strengthening its large regional bank franchise, solid funding profile, and improved liquidity.
  • The stable outlook anticipates gradual profitability improvement, with net income to tangible assets expected to reach 1% by year-end 2025.
  • Capitalization remains adequate, with a common equity Tier 1 (CET1) ratio of 10.6% as of Q2 2025 and Moody's Ratings tangible common equity (TCE) to risk-weighted assets ratio expected to remain around 10.5%.
  • The affirmation and outlook revision reflect certain strengths, though Citizens' relative positioning within its rating category remains less favorable than that of similarly rated large regional bank peers.
  • Over the past few years, Citizens' management team has worked to strengthen the bank's franchise through a number of strategic initiatives, including expense programs to rationalize costs and fund continued investments.
  • The bank's funding profile is buttressed by its strong core deposit franchise, which more than fully funds the loan portfolio (about 80% loan-to-deposit ratio), limiting its need for short-term wholesale funding.
  • Citizens' liquidity profile has also improved in recent years, with a Moody's Ratings liquid banking assets to tangible banking assets ratio of 25% at 30 June 2025.
  • Despite these credit positives, Citizens' profitability remains muted relative to bank industry averages, evidenced by its 0.83% reported return on average tangible assets, mid-60% efficiency ratio, and revenue contribution from noninterest income of 29% for second-quarter 2025.
  • We expect gradual improvement in profitability as the negative impact from terminated swaps and noncore operations abates, and the benefits of fixed asset repricing and its strategic initiatives materialize.

Statistics:

  • Net income to tangible assets expected to reach 1% by year-end 2025.
  • Common equity Tier 1 (CET1) ratio of 10.6% as of Q2 2025.
  • Moody's Ratings tangible common equity (TCE) to risk-weighted assets ratio expected to remain around 10.5%.
  • Loan-to-deposit ratio of about 80%.
  • Liquid banking assets to tangible banking assets ratio of 25% at 30 June 2025.
  • Reported return on average tangible assets of 0.83% for second-quarter 2025.
  • Efficiency ratio of mid-60% for second-quarter 2025.
  • Revenue contribution from noninterest income of 29% for second-quarter 2025.

Sources:

  • Moody's Investors Service
  • [Rating Methodologies page on https://ratings.moodys.com](https://ratings.moodys.com) for a copy of the primary methodology used in these ratings.