April 19 (Reuters) - Citizens Financial Group Inc (CFG.N) reported a first-quarter profit on Wednesday that missed Wall Street estimates as the lender recorded a drop in deposits and set aside more rainy-day funds to cover for loans, amid fears of a looming recession.
The bank's shares, which have lost nearly 23% so far this year, fell about 1.5% to $30 in premarket trading.
Regional lenders have been roiled in recent weeks after bank runs at two mid-sized rivals battered confidence in the stability of the banking industry and reverberated through global markets.
The banking crisis also shook people's faith in the health of the economy and added to worries of an upcoming recession, prompting Citizens Financial to set aside $168 million in case its customers fall behind on their loan payments, compared with $3 million a year earlier.
Average deposits fell 2.6% to $174.4 billion in the three months ended March 31, compared with $179 billion at the end of the previous quarter.
Spooked by the turmoil in the banking sector, customers have sought to move funds from regional banks to bigger Wall Street titans considered systemically important by regulators and policymakers.
Earlier this week, deposits at State Street Corp (STT.N) and Charles Schwab Corp (SCHW.N) fell in the first quarter amid a flight of funds, with customers seeking better returns elsewhere.
The bank reported an underlying profit of $1.10 per share; analysts' on average had expected it to report $1.13 per share, according to Refinitiv IBES data.
The bank said net income in the first quarter was $511 million, compared with $420 million a year earlier.
