CITIZENS FINANCIAL GROUP INC/RI

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” section of this report.

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The following table presents 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 $220 million, or 4%, and net interest margin increased 13 basis points compared to 2024. The increase in net interest income is driven by higher net interest margin which reflects lower funding costs, including the reduction of higher-cost funding given the auto loan portfolio runoff and education loan sale, lower terminated swap impacts, and fixed-rate asset repricing benefits, partially offset by lower asset yields.

Average interest-earning assets decreased $1.0 billion compared to 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.

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Average deposits increased $1.2 billion compared to 2024, driven primarily by growth in the Private Bank, partially offset by a reduction in higher-cost brokered deposits.

Average total borrowed funds decreased $1.8 billion compared to 2024, driven by a decline in auto collateralized borrowings, given runoff of the auto loan portfolio, and FHLB advances.

The following table presents changes in net interest income attributable to volume and rate changes for each major interest-earning asset and interest-bearing liability category:

(1)Volume and rate changes are allocated on a consistent basis using the respective percentage changes in average balances and average rates.

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Noninterest Income

The following table presents the components of 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 year ended December 31, 2025, compared to 2024, are described below:

•Wealth fees increased reflecting growth in assets under management, primarily driven by net inflows as well as market appreciation;

•Capital markets fees increased driven by higher loan syndication and equity underwriting fees, partially offset by lower M&A fees;

•Mortgage banking fees increased driven by higher MSR valuation results, net of hedging; and

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

Noninterest Expense

The following table presents the components of noninterest expense:

The primary drivers for the change in noninterest expense for the year ended December 31, 2025, compared to 2024, are described below:

•Salaries and employee benefits increased reflecting hiring related to the Private Bank and Private Wealth build-out, strong capital markets fee performance, and increased medical benefit costs; and

•Other operating expense declined driven primarily by lower FDIC deposit insurance costs, partially offset by higher operating costs.

For more information regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in Item 1.

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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 “Risk Management – Credit Risk” for more information.

Provision expense of $608 million compared with a provision of $687 million for 2024, reflecting improving loan mix and reduced CRE.

Income Tax Expense

Income tax expense of $497 million increased $118 million, and our effective income tax rate of 21.3% increased from 20.1% compared to 2024. These increases were driven by a reduced benefit from tax-advantaged investments on higher pre-tax income.