2. Citizens Financial Group, Inc. (NYSE:CFG)
Number of Hedge Fund Holders: 47
Cramer mentioned the Rhode Island-based Citizens Financial Group, Inc. (NYSE:CFG) during an episode of Mad Money and talked about its capital ratios and the ensuing benefits. He said:
“I like the regional banks here for roughly the same reason that I like the commodity chemical place. These stocks have been out of favor for a very long time, but they should do much better in a falling interest rate environment. Of course, some of the regionals are a lot better than the others. We don’t want exposure to the outfits that still haven’t recovered from last year’s mini-banking crisis.”
Cramer has expressed a favorable view of the bank, describing it as a strong operator. He mentioned that the stock is nearly back to its pre-Silicon Valley Bank collapse levels from last spring, a period that significantly impacted regional banks. Cramer believes that we are moving in a positive direction for these institutions.
He pointed out that regional banks faced severe pressure when the Federal Reserve quickly raised interest rates, followed by a prolonged period of elevated short-term rates. However, with the Fed now shifting towards cutting rates, Cramer emphasized that regional banks are likely to benefit, even if the rate reductions come at a slower pace. He stated, “We know that’s going to happen,” suggesting confidence in the eventual easing of monetary policy.
According to Cramer, the current economic landscape is quite favorable for regional banks. He remarked that the economy remains robust enough to make the term “soft landing” seem overly negative. With interest rates on the decline, he referred to the situation as “nirvana” for these banks, adding that credit losses are expected to decrease during this rate-cutting phase. Coming to the company, he said:
“It’s a Northeast bank, it’s called Citizens Financial Group. I haven’t focused on it since it was spun off by the Royal Bank of Scotland a decade ago. When you take a closer look at Citizens, it’s got some of the best capital ratios of large regional banks. That matters for a couple of reasons. First, it offers safety. This is how you know Citizens won’t be the next First Republic if we have another banking blow-up. But more importantly, in calmer times, it gives them [the] flexibility to do other shareholder-friendly things, dividends [and] buybacks. In fact, in late July, after hearing all the regional banks report second-quarter earnings, analysts at Deutsche Bank called Citizens Financial their top pick in the sector, citing strong earnings growth potential as net interest margins normalize, growth initiatives pay off like the private bank build-out and their expansion in New York City and mortgage demand bounced back thanks to lower rates. Deutsche Bank analysts also know that Citizen has been held back in recent quarters by some significant one-off items. But management is signaling that there shouldn’t be much more of an impact from that kind of thing going forward. That all sounds real good to me. So count me in as a believer in Citizens Financial.”
Citizens Financial Group (NYSE:CFG) functions as a bank holding company that specializes in offering a wide range of retail and commercial banking products and services. It operates an integrated Consumer Banking experience and it boasts around 3,300 ATMs and approximately 1,000 branches located across 14 states and the District of Columbia.
In the second quarter, Citizens Financial Group (NYSE:CFG) reported commendable performance, characterized by strong fee generation across its Capital Markets, Wealth Management, and Card divisions. Positive trends in deposit growth were evident. The company’s Private Bank achieved a total of $3.6 billion in assets under management, progressing toward its ambitious goal of reaching $10 billion by the close of 2025. Its revenue from the Private Bank surged by 68%, totaling about $30 million in the second quarter, with projections showing a path toward breakeven on the bottom line later this year.
Chairman and CEO Bruce Van Saun emphasized the successful execution of the company’s strategic initiatives, highlighting significant milestones such as the Private Bank’s deposits reaching $4 billion and now has $3.6 billion in assets under management. He conveyed confidence in the company’s full-year guidance and medium-term objectives.
