Is Citigroup's Business Transformation Plan Gaining Momentum?

Citigroup, Inc. C is advancing its multi-year restructuring plan to cut costs and sharpen its focus on core operations. In January 2024, the bank announced plans to eliminate 20,000 jobs by 2026, thus improving efficiency and profitability. Strategically, the company is also exiting consumer banking operations in 14 markets across Asia and EMEA (announced in April 2021), allowing for a greater focus on its core businesses.

The company has successfully exited from consumer banking businesses in nine countries. Additionally, as part of its strategy, Citigroup continues to make progress with the wind-down of its Korean consumer banking operations and its overall operations in Russia, as well as preparations for a planned initial public offering (IPO) of its consumer banking and small business and middle-market banking operations in Mexico. These initiatives will free up capital, enabling the company to pursue investments in wealth management and investment banking (IB) operations, which will drive fee income growth.

The company’s efforts are already paying off as wealth management revenues registered a 22% year-over-year increase, while IB revenues rose 13% year over year in the first half of 2025. Additionally, C’s strategic efforts are helping to reduce expenses. Its operating expenses declined 1% year over year, while total revenues (net of interest expense) grew 5% in the first half of 2025. This indicates that the company’s turnaround efforts are gaining momentum. Accelerating top-line growth and effectively managing expenses will help boost profitability.

Through its transformation initiatives, Citigroup expects revenues to grow at a compounded annual rate of 4-5% by the end of 2026 and drive $2-$2.5 billion of annualized run-rate cost savings. Management expects the return on tangible common equity (ROTCE) to be 10-11% by 2026. By the end of 2025, ROTCE was 8.9%.

Key Competitors Challenging Citigroup

Wells Fargo WFC is making efforts to strengthen its operations. While the bank is reducing headcount and streamlining processes, it is investing in its branch network and upgrading digital tools to augment the customer experience. As part of its efforts to enhance the branch experience, Wells Fargo is investing more in its branch staff and upgrading technology. This allows it to maintain a focus on cost management while improving customer service and accessibility. With these strategic efforts, Wells Fargo anticipates $2.4 billion in gross expense reductions by 2025.

Bank of America BAC continues to strengthen its operations by aligning its banking centers according to customer needs. The bank has embarked on an ambitious expansion plan to open financial centers in new and existing markets. By 2027, Bank of America plans to expand its network by opening more than 150 financial centers. It also remains committed to providing modern and state-of-the-art financial centers through its ongoing renovation and modernization project. These initiatives will enable Bank of America to enhance its digital offerings and cross-sell various products, including mortgages, auto loans and credit cards.

C’s Price Performance, Valuation and Estimates

Shares of Citigroup have gained 40.2% year to date, outperforming the industry’s growth of 26.8%. 

Price Performance

From a valuation standpoint, C trades at a forward price-to-earnings (P/E) ratio of 10.74X, below the industry’s average of 14.81X.

Price-to-Earnings F12M

The Zacks Consensus Estimate for C’s 2025 and 2026 earnings implies a year-over-year rise of 27.2% and 27.9%, respectively. The estimates for 2025 and 2026 have been revised upward over the past 60 days.

Earnings Estimates

Citigroup stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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