Citizens Financial's NII Slips in 1H25: Can Fed Cuts Drive a Rebound?

Citizens Financial Group’s CFG net interest income (NII) has shown steady growth over the past few years, recording a compound annual growth rate (CAGR) of 5.3% for the period 2019–2024. However, in the first half of 2025, its NII slipped slightly to $2.83 billion. The Federal Reserve’s recent policy moves are now poised to support NII growth. In September 2025, the Fed cut rates by 25 basis points to 4.00–4.25% after a nine-month pause, signaling the possibility of two more cuts before year-end. These reductions, together with continued expansion of the net interest margin (NIM) and improving yields on interest-earning assets, are expected to support NII in the coming quarters.With Fed rate cuts, improving asset yields and loan growth, Citizens Financial appears positioned for growth in NII in the coming period. Management now expects NII to grow 3–5% in 2025 compared with the $5.6 billion reported in 2024. Also, NIM is expected to improve to 3.0% from 2.85% in 2024 during the same period. How CFG’s Peers Are Expected to Fare in Terms of NIICitizens Financial’s peers, such as Flagstar Financial, Inc. FLG and Webster Financial Corporation WBS, are also influenced by the interest rate trajectory.Flagstar Financial has experienced volatility in NII over the past few years, with a four-year CAGR (ended 2024) of 18.3%. In the first half of 2025, the bank’s NII declined 29.8% to $829 million, reflecting lower loan balances and elevated funding costs. Management expects 2025 NII to be between $1.70 billion and $1.75 billion, supported by loan repricing, deployment into higher-yielding securities and anticipated Fed rate cuts. Flagstar Financial aims for further NII growth through 2026–2027 as funding costs decline and low-cost deposits from the Signature Bank acquisition bolster margins.Webster Financial has maintained solid momentum in NII growth, with a five-year CAGR (ended 2024) of 19.6%. In the first half of 2025, the bank posted NII of $1.2 billion, up 8.2% year over year, supported by higher loan and deposit balances. For 2025, Webster Financial’s management projects NII of $2.47–$2.50 billion (non-FTE), underpinned by a healthy loan pipeline, growth in deposits and efforts to strengthen the securities portfolio. Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Webster Financial Corporation (WBS): Free Stock Analysis Report Citizens Financial Group, Inc. (CFG): Free Stock Analysis Report Flagstar Financial, Inc. (FLG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks