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 average 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 our 2025 Form 10-K.

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 $171 million, or 12%, and net interest margin increased 25 basis points for the three months ended March 31, 2026, compared to the same period in 2025. The increase in net interest income reflects higher net interest margin driven by improved funding costs, including the reduction of higher-cost funding given runoff of the auto loan portfolio, terminated swap impacts, and fixed-rate asset repricing benefits, partially offset by lower asset yields.

Average interest-earning assets increased $6.9 billion for the three months ended March 31, 2026, compared to the same period in 2025, driven by an increase in total loans and leases, cash held in interest-bearing deposits, and investment securities.

Average deposits increased $8.6 billion for the three months ended March 31, 2026, compared to the same period in 2025, driven primarily by growth in the Private Bank and in commercial, partially offset by a reduction in higher-cost brokered deposits.

Average total borrowed funds decreased $1.8 billion for the three months ended March 31, 2026, compared to the same period in 2025, driven primarily by a decline in auto collateralized borrowings, given runoff of the auto loan portfolio, partially offset by an increase in FHLB advances.

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 three months ended March 31, 2026, compared to the same period in 2025, are described below:

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

•Wealth fees increased primarily driven by growth in assets under management, largely from net inflows; and

•Mortgage banking fees decreased reflecting lower MSR valuation results, net of hedge impact, and lower servicing revenue, partially offset by higher production revenue.

Noninterest Expense

The following table presents the components of noninterest expense:

The primary drivers for the change in noninterest expense for the three months ended March 31, 2026, compared to the same period in 2025, are described below:

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

•Other operating expense declined reflecting lower FDIC deposit insurance costs.

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 $140 million for the three months ended March 31, 2026 compared with a provision of $153 million for the same period in 2025, reflecting runoff of certain retail portfolios and improving credit trends and loan mix.

Income Tax Expense

Income tax expense of $133 million increased $38 million and our effective income tax rate of 20.5% increased from 20.3% for the three months ended March 31, 2026, compared to the same period in 2025. These increases were driven by a reduced benefit from tax-advantaged investments on higher pre-tax income. 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.