Citizens Financial reports earnings as RBS eyes further selldown

21st Jul 2015 14:31

(ShareCast News) - Citizen Financial, the US bank that Royal Bank of Scotland floated in New York last September, reported a big decline in second quarter earnings but they were still ahead of most analyst expectations.Underlying numbers from the Providence, Rhode Island-based banking outfit were encouraging, with adjusted net income rising 8% to $215m or 40 cents per share, when excluding net restructuring charges and special items. Analysts expected nearer 37 cents.However, statutory second quarter net income stood at $190m, or $0.35 per diluted common share, down 39% from $313m and $0.56 per share in the same period last year.The results were reduced by $25m after tax from net restructuring charges and special items.Revenue of $1.2bn in the period was roughly in line with Wall Street forecasts, up 1% on the first quarter but down $273m year-on-year after a divestment last year that benefited second quarter 2014 revenues by an estimated $313m.Citizens chairman and chief executive officer Bruce Van Saun said: "We are pleased with our ability to continue to execute well against the key initiatives in our turnaround plan. During the quarter we demonstrated strong loan and deposit growth and good expense discipline, which combined for solid operating leverage, on an adjusted basis.The US bank has launched a series of further initiatives with the aim of continuing to help grow revenue and keep costs under control.RBS, which currently has a 40.8% stake in Citizens after selling more shares in April, aims to fully exit the US bank by the end of next year.The UK bank has suggested that another selldown will take place "in the autumn", although some analysts believe this could happen earlier.Ian Gordon at Investec expects a £0.4bn "write-up" in RBS's second quarter to reflect 13% share price appreciation in the quarter, with the Citizens divestment triggering a jump in RBS's CET 1 ratio to >14% by 2015 year-end.