C vs. WFC: Which Stock Has More Upside Post Rate Cut Rally?

By Riya Anand | September 26, 2025, 1:26 PM

The financials of both Citigroup, Inc. C and Wells Fargo & Company WFC are influenced by the Federal Reserve’s interest rate trajectory. Both major banks offer compelling but different opportunities. A relatively lower-rate environment typically boosts loan demand but can also squeeze the net interest margin, making each bank dependent on its business mix, capital strength, and sensitivity to consumer borrowing.

Hence, a closer examination of the key dynamics of Citigroup and Wells Fargo is key to evaluating which stock may have the greater upside as the Fed pivots to monetary policy easing.

Citigroup vs. Wells Fargo: 2 Banks, 1 Fed Pivot

This month, at the end of a two-day FOMC meeting, the Fed kicked off an easing cycle and cut interest rates by 25 basis points to 4.00-4.25%, marking the end of a nine-month pause. The Fed also signaled two more rate cuts by the end of 2025, citing a softening labor market despite inflation pressures as the key reason behind the easing.

Lower rate will support net interest income (NII) growth, a critical earnings driver for banks like WFC and C, as funding pressure eases. While lower benchmark rates can compress yields on loans and securities, improving the lending backdrop and higher refinancing will help offset this. Also, relatively lower rates will increase borrowing and boost market liquidity, driving higher deal volumes and trading opportunities. This will support investment banking (IB) and trading businesses for both companies.

The Fed reduced interest rates by 100 basis points last year. As such, Citigroup’s NII rose 8% year over year in the first half of the year. Meanwhile, Wells Fargo’s NII declined nearly 4% year over year.

For 2025, WFC’s management expects NII to be in line with the $47.7 billion reported in 2024. Then again, Citigroup’s NII (excluding Markets) is projected to rise 4% on a year-over-year basis in 2025.

Citigroup & Wells Fargo: 2 Banking Giants, 2 Strategies

C and WFC are taking different approaches to strengthen their operations and unlock growth opportunities.

Citigroup has been betting on leaner, streamlined operations. The company is emphasizing growth in core businesses through restructuring operations internationally. In April 2021, C announced the plan to exit the consumer banking business in 14 markets across Asia and EMEA. Since then, the company has exited consumer businesses in nine countries.

Further, 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 of its consumer banking and small business and middle-market banking operations in Mexico. These initiatives will free up capital and help the company pursue investments in wealth management and IB operations, which will stoke fee income growth.

Conversely, Wells Fargo has made strengthening its risk management and compliance infrastructure a top priority. Under CEO Charlie Scharf's leadership, the company is making significant progress in enhancing its compliance framework. At the Barclays 23rd Annual Global Financial Services Conference held on Sept. 9, 2025, WFC’s management highlighted a shift from regulatory remediation to growth as asset cap lifted, especially in commercial banking, corporate and IB, and wealth management.

The bank has already streamlined operations, exited 13 businesses and saved $12 billion in costs, which are being reinvested into core areas. Additionally, the bank is aiming to grow its market share in both consumer and commercial lending, making it more competitive and adaptable to changing market demands.

WFC & C’s Expense Management Efforts

As the banking industry adapts to rising expenses, shifting customer preferences and ongoing digital disruption, Citigroup and Wells Fargo are sharpening their focus. However, their approaches to expense management reflect two different paths.

Citigroup is not just trimming around the edges; it is undergoing a full-fledged transformation under the leadership of CEO Jane Fraser. The company is overhauling its operating model, simplifying reporting structures, reducing headcounts and streamlining operations. Driven by these efforts, management expects 2025 and 2026 expenses to be lower than the $53.9 billion reported in 2024.

Wells Fargo, alternatively, is taking a more balanced approach to its operations. While the bank is reducing headcount and streamlining processes, it is also investing in its branch network and upgrading digital tools to augment the customer experience. This allows the bank to maintain a focus on cost management while enhancing customer service and accessibility. Given strategic efforts, management expects its non-interest expenses to be $54.2 billion in 2025, suggesting a decline from the $54.6 billion reported in 2024.

C & WFC’s Stock Performance, Valuation & Other Comparisons

In the past year, Wells Fargo shares have gained 50.9%, whereas Citigroup’s stock has surged 65.1%. In comparison, the industry has risen 49.9%.

Price Performance