Citigroup (C) just reported strong Q1 2025 earnings, beating analyst expectations in both revenue and income growth. Performance was boosted by capital markets-sensitive businesses, cost control, and ongoing share buybacks. I remain bullish on the shares, trading at only 8.7x my $7.50/share EPS outlook for 2025. While the near-term outlook remains uncertain given weakening U.S. economic growth, EPS may increase marginally above $9 per share should Citigroup reach its 10-11% return on tangible equity target next year. All in all, Citigroup stands out as one of the most compelling value opportunities in U.S. banking right now.
Citigroup Segment Performance Takeaway
Citigroup reports results in six main operating segments: U.S. Personal Banking (24.2% of Q1 2025 revenues), Services (22.6%), Markets (27.7%), Wealth (9.7%), Banking (9%), and “All Other (Managed Basis)” (6.7%) that includes legacy franchises, global staff functions, and corporate treasury, among others.
Segment performance in Q1 2025 was polarized. On the one hand, segments more sensitive to capital market activity (wealth, markets, and banking) did particularly well, recording revenue growth of 12% to 24% year-over-year. Reasonable cost control and a benign risk environment helped drive profitability substantially higher year-over-year.
In contrast, U.S. Personal Banking and Services revenues only grew 2-3% year-over-year in Q1 2025. Profitability improved; nevertheless, it was helped by lower expenses and provision releases. All Other (Managed Basis) was the weakest performing segment, with costs only declining by 17%, well below the 39% year-over-year revenue decline. Coupled with higher provisions, this drove the segment’s net loss to $870 million, up from $477 million in the previous year.
Citigroup Q1 2025 Financial Highlights
Citigroup’s consolidated revenues increased 3% year-over-year, while operating expenses were 5% lower. The cost of credit was only 15% higher (consolidated provisioning was impacted by a worsening macroeconomic backdrop), resulting in a 21% year-over-year increase in the bank’s bottom line to $4 billion. Per-share earnings surged 24% to $1.96/share, helped by ongoing share repurchases. This was above the $1.85/share Wall Street consensus.
Tangible book value per share stood at $91.52/share at the end of Q1 2025, up 2.4% quarter-over-quarter. The ROTE improved by 1.5% year-over-year to 9.1%.
Overall, Citigroup’s Q1 2025 results were particularly impressive in light of the worsening macroeconomic outlook. We should note that the company did benefit from a lower FDIC assessment, without which expenses would have been only 3% lower.
The bank’s capital position remains the only relative disappointment. The CET1 capital ratio stood at 13.4% at the end of Q1 2025, down marginally both quarter-over-quarter and year-over-year. Still, it remains comfortably above the bank’s 12.1% requirement. This allows Citigroup to allocate roughly $1.5 billion to share repurchases per quarter.
Citigroup Valuation
Citigroup confirmed its 2025 outlook, notwithstanding risks related to U.S. economic growth. The weak economic backdrop will likely spill over into Mexico, where Citigroup is expected to monetize its local Banamex unit through an initial public offering.
On a more positive note, the bank benefits from elevated trading/hedging activity in capital markets, and the recent price decline makes ongoing share repurchases even more accretive.
I now expect Citigroup to deliver EPS of roughly $7.50/share in 2025, higher than my initial $7 estimate. This puts the bank’s forward earnings multiple at just 8.7x. For comparison, U.S. regional banks trade at 9.6x forward earnings, with Citigroup’s larger competitors, such as JPMorgan Chase, even commanding a circa 12.8x forward earnings multiple.
I agree that the bank’s near-term earnings outlook is quite uncertain. Hence, risks to my $7.50/share 2025 EPS target are clearly tilted to the downside. Even so, I expect the U.S. economy to pick up in 2026, which should allow Citigroup to reach its 10-11% ROTE target. If we take Citigroup’s ROTE target range of 10% as the low end, it should deliver EPS marginally above $9/share in 2026. This puts the 2026 earnings multiple at only 7.3x, highlighting Citigroup’s attractive valuation.
Last but not least, the roughly 29% discount to tangible book value provides an extra margin of safety. As such, I remain bullish on Citigroup stock.
Is Citibank a Buy, Sell, or Hold?
Turning to Wall Street, Citigroup earns a Moderate Buy consensus rating based on 11 Buy and four Hold recommendations over the past three months. Notably, not a single analyst sees Citigroup stock as a Sell. The average Citigroup stock price target is $88.17, implying a ~37% potential upside.
Banking Stalwart With a Discount
Citigroup delivered strong Q1 2025 earnings, and the bank will likely exceed my initial 8% ROTE estimate for 2025, delivering EPS of circa $7.50/share. The stronger performance comes amid robust capital markets activity, limited impact from credit cost provisions, and a lower share price, which makes buybacks even more accretive.
While near-term risks remain clearly to the downside amid weakening U.S. economic growth, I believe Citigroup’s substantial 29% tangible book discount and expectations for even stronger earnings in 2026 make the bank a compelling bullish opportunity, especially at currently discounted prices around ~$65 per share.