April 17 (Reuters) - Citizens Financial on

Wednesday reported a lower first-quarter profit as it earned

less from customer interest payments.

Banks in the United States have been bracing for a

turnaround in gains from interest income, as they paid more to

retain customers who are in search of higher-yield securities,

while loan growth declines.

Citizens Financial's net interest income (NII) - the

difference between what it earns on loans and pays for deposits

- tumbled 12% to $1.44 billion in the first quarter compared

with the previous year.

Larger rivals Bank of America ( BAC ) and Wells Fargo ( WFC )

also posted similar declines in NII in recent days.

Period-end loans and leases fell 7% to $143 billion in the

quarter ended March from a year ago.

The bank set aside $171 million in provisions for credit

losses in the first quarter, slightly higher than $168 million a

year earlier, as it prepares for more customers to miss or fall

behind on their payments.

The lender reported net income of $334 million, or 65 cents

per share, for the first quarter, compared with $511 million, or

$1 per share, a year earlier.