Citigroup ($C) Pre-earnings Analysis
Citigroup just touched high it hasn’t seen since 2008, which may be signaling a turnaround in a financial institution that’s often forgotten among the big banks. The company continues to show financial resilience and operational discipline as it enters the second half of 2025, which is likely what’s leading shares higher. And now that it’s touched highs not seen in more than a decade, the bank may continue attracting investors into a higher rally, especially if they report strong earnings in two weeks. The bank reported solid first-quarter results, with net income climbing to $4.1 billion on revenues of $21.6 billion, both figures marking a year-over-year improvement. Revenue rose 3%, while operating expenses fell by 5%, signaling improved cost control and operating efficiency.
Looking ahead, the earnings outlook for Citigroup appears promising. Wall Street expects EPS to grow by roughly 24% this year, with continued momentum into 2026. The company has also built a track record of beating analyst expectations, reinforcing the case for long-term upside potential.
In terms of risk, management is proactively addressing credit concerns. Citigroup increased its allowance for credit losses to $22.8 billion, reflecting a conservative stance amid a cautious macroeconomic environment. However, the bank’s credit book remains high quality, with a focus on consumers with strong credit profiles. This balance of earnings growth and prudent risk management makes Citigroup a compelling value play in the financial sector, even if they don’t do exceptional on these earnings.
Lastly, the Trump administration is loosening regulatory restrictions on financial institutions and is aggressively pushing for rate cuts. Looser regulations will obviously help banks, and rate cuts have both a positive and negative impact. In the short run, rate cuts tend to hurt traditional banks by compressing margins and cutting into interest income. However, if the cuts stimulate economic growth and loan demand, banks may benefit over the longer term, especially those with diversified revenue streams beyond lending (like JPMorgan or Citigroup).