CITIZENS FINANCIAL GROUP INC/RI

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on our average interest-earning assets and the effective cost of our interest-bearing liabilities. Factors that influence our net interest income include, but are not limited to, the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to the “Market Risk” and “Risk Governance” sections of our 2024 Form 10-K.

The following tables present the major components of our net interest income. Average balance represents amortized cost, excluding the unamortized basis adjustments related to the transfer of certain HTM securities from AFS. The yield/rate is based on annualized interest income or expense for the periods presented and includes the impact of hedging activities associated with the respective asset and liability categories.

(1) Net interest income and net interest margin on an FTE basis are non-GAAP financial measures. See “Non-GAAP Financial Measures” for more information.

Net interest income increased $27 million, or 2%, for the three months ended June 30, 2025 compared to the same period in 2024, driven by higher net interest margin, partially offset by a decline in average interest-earning assets. For the six months ended June 30, 2025, net interest income decreased $24 million, or 1%, compared to the same period in 2024, driven by a decline in average interest-earning assets, partially offset by higher net interest margin.

Net interest margin on an FTE basis increased 8 basis points and 3 basis points for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024, as the benefit of lower funding costs, Non-Core portfolio runoff and fixed-rate asset repricing were partially offset by the impact of variable-rate asset repricing, net of swaps.

Average interest-earning assets decreased $2.1 billion and $3.6 billion for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024, driven by a decline in total loans and leases and cash held in interest-bearing deposits, partially offset by an increase in investment securities and loans held for sale.

Average deposits were stable for the three months ended June 30, 2025 and decreased $1.5 billion for the six months ended June 30, 2025, compared to the same periods in 2024. The decline during the six-month period is driven by lower commercial deposits and a reduction in higher-cost brokered deposits, partially offset by an increase in consumer deposits driven by the Private Bank.

Average total borrowed funds decreased $2.0 billion and $1.4 billion for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024, reflecting a decline in auto collateralized borrowings, given runoff of the Non-Core portfolio, and FHLB advances, partially offset by an increase in senior debt.

Noninterest Income

(1) Includes bank-owned life insurance income and other income for all periods presented.

The primary drivers for the change in noninterest income for the three and six months ended June 30, 2025, compared to the same periods in 2024, are described below.

•Mortgage banking fees increased driven by higher MSR valuation, net of hedging.

•Wealth fees increased reflecting growth in assets under management, primarily from the Private Bank.

•Service charges and fees increased driven primarily by higher overdraft and cash management fees.

•Capital markets fees decreased as a result of lower M&A and bond underwriting fees, partially offset by higher equity underwriting fees during the three- and six-month periods, and by higher loan syndication fees during the six-month period.

Noninterest Expense

The primary drivers for the change in noninterest expense for the three and six months ended June 30, 2025, compared to the same periods in 2024, are described below.

•Other operating expense decreased driven primarily by lower FDIC deposit insurance, reflecting $5 million and $40 million, respectively, for CBNA’s special assessment recognized during the same three- and six-month period in 2024, and lower fraud losses. Lower marketing-related costs are also a driver during the three-month period.

•Salaries and employee benefits increased reflecting hiring related to the Private Bank and Private Wealth build-out, as well as a broader increase in salaries and benefits.

For more information regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in our 2024 Form 10-K.

Provision for Credit Losses

The provision for credit losses is the result of a detailed analysis performed to estimate our ACL. The total provision for credit losses includes the provision for loan and lease losses and the provision for unfunded commitments. Refer to “Analysis of Financial Condition — Credit Quality” for more information.

Provision expense of $164 million and $317 million for the three and six months ended June 30, 2025, respectively, compared with a provision of $182 million and $353 million for the same periods in 2024, reflecting Non-Core portfolio runoff and improving loan mix.

Income Tax Expense

Income tax expense of $118 million and $213 million increased $30 million and $29 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The effective income tax rate of 21.4% and 20.9% for the three and six months ended June 30, 2025 increased from 18.5% and 20.3%, respectively, compared to the same periods in 2024. These increases are primarily driven by higher pre-tax income and the impact of certain tax matters. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusting for discrete items that occurred during the period.