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BAC vs. C: Which Bank Stock is Poised to Offer Better Value?
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Key Takeaways
Bank of America projects 2025 NII of $15.5-$15.7B, supported by resilient consumer demand.
Citigroup is cutting 20,000 jobs and exiting 14 markets to save up to $2.5B annually.
Citigroup trades at 10.8X forward P/E versus BAC's 12.4X, with stronger YTD share gains.
Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are leading U.S. banks, offering diversified financial services, including commercial banking, investment banking, wealth management and retail banking, and are prominent, systemically important institutions with a global footprint.
BAC is more leveraged to U.S. interest rates and consumer health, while C is majorly influenced by global trade, international growth and currency/geopolitical trends. In this context, let’s take a closer look to determine which stock provides better value to investors.
The Case for Bank of America
Bank of America, one of the most asset-sensitive banks in America, is likely to witness a modest decline in net interest income (NII) over the medium term as the Federal Reserve starts lowering interest rates. Last week, Fed chairman Jerome Powell signaled a rate cut as early as September amid easing inflation and a weakening labor market.
Nonetheless, the impact of the current rate cut cycle on BAC’s NII is likely to be minimal this year. The company projects NII to rise 6-7% in 2025, reaching $15.5-$15.7 billion in the fourth quarter, even if the central bank initiates rate cuts. This is based on the resilient consumer behavior and steady demand for loans.
Moreover, Bank of America’s aggressive financial center expansion strategy across the United States will solidify customer relationships and tap into new markets, driving NII growth over time. The company continues to align its banking centers according to customer needs. These efforts, along with the success of the person-to-person money transfer system Zelle and the digital financial assistant Erica, will enable BAC to offer enhanced digital services and cross-sell several products, including mortgages, auto loans and credit cards.
The shift toward easier monetary policy is expected to support client activity, deal flow and asset values. Thus, Bank of America’s non-interest income streams will likely see meaningful upside. Lower rates are expected to aid the company’s asset quality, as declining rates will ease debt-service burdens and improve borrower solvency.
As the bank embarks on an ambitious expansion plan to open financial centers in new and existing markets, operating expenses are likely to remain elevated in the near term. BAC expects non-interest expenses to rise moderately in 2025.
The Case for Citigroup
Similar to BAC, Citigroup’s NII is expected to fall marginally as the Fed lowers interest rates. Yet, for this year, the company expects NII (excluding Markets) to grow around 4%, indicating improved loan demand and higher deposit balances.
Further, Citigroup has been emphasizing growth in core businesses by streamlining operations internationally. In sync with this, the company is streamlining globally, exiting consumer banking in 14 Asia and EMEA markets (announced in 2021) and has already exited nine countries. Also, Citigroup is simplifying its organizational structure, cutting 20,000 jobs by 2026, with divestitures and workforce reductions expected to save $2–$2.5 billion annually.
Such moves by Citigroup are likely to free up capital, which will be invested in profitable businesses like wealth management and investment banking. Also, as the Fed cuts interest rates, it will boost deal volume, client engagement and asset value. Hence, these developments will ultimately drive stronger fee income growth.
Additionally, as the company is focusing on a leaner organization structure and reducing global footprint, operating expenses are likely to come down. Citigroup anticipates expenses to be below $53 billion in 2026, excluding FDIC fees, implying a decline from the $56.4 billion in 2023.
C & BAC: Price Performance, Valuation & Other Comparisons
This year, C and BAC shares have risen 37.5% and 14.8%, respectively. This shows investors are steadily gaining confidence in Citigroup’s business transformation plan. Hence, in terms of price performance, C has a clear edge over Bank of America.
YTD Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Citigroup is currently trading at a 12-month forward price-to-earnings (P/E) of 10.8X. BAC stock, in contrast, is currently trading at a 12-month forward P/E of 12.4X.
P/E F12M
Image Source: Zacks Investment Research
Both are trading at a discount compared with the industry’s 12-month forward P/E of 14.8X. So, C is trading at a discount compared with Bank of America.
Bank of America and Citigroup undergo annual stress tests conducted by the Fed before they can announce their capital distribution plans. Following the 2025 stress test, they hiked their dividends. Citigroup raised its quarterly dividend by 7% to 60 cents per share. It has a dividend yield of 2.48%. Likewise, BAC increased its quarterly dividend by 8% to 28 cents per share. It has a dividend yield of 2.06%. Based on dividend yield, C has an edge over BAC.
Dividend Yield
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 10.25% is way higher than Citigroup’s 7.29%. This reflects BAC’s efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for C & BAC?
The Zacks Consensus Estimate for BAC's 2025 and 2026 earnings indicates 12.2% and 16.1% growth, respectively. Bank of America’s earnings estimates for 2025 have been revised upward, while for 2026, estimates have remained unchanged.
BAC Earnings Estimates
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for C’s 2025 and 2026 sales earnings indicates a jump of 27.2% and 28%, respectively. Its earnings estimates for 2025 have remained unchanged, while for 2026, it has been revised slightly upward over the past month.
C Earnings Estimates
Image Source: Zacks Investment Research
BAC or C: Which Stock Deserves a Place in Your Portfolio?
Citigroup’s ongoing restructuring, including exit from non-core consumer markets, 20,000 job cut decision and streamlining of management structure, is freeing up billions in cost savings. These moves allow it to focus on profitable businesses like wealth management and investment banking, positioning it to benefit from rising deal activity and client engagement as interest rates decline.
Moreover, Citigroup’s valuation is attractive, trading at a lower forward P/E than Bank of America while delivering stronger YTD price performance. A higher dividend yield further enhances its appeal, making Citigroup a compelling buy for value-focused investors.
Image: Bigstock
BAC vs. C: Which Bank Stock is Poised to Offer Better Value?
Key Takeaways
Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are leading U.S. banks, offering diversified financial services, including commercial banking, investment banking, wealth management and retail banking, and are prominent, systemically important institutions with a global footprint.
BAC is more leveraged to U.S. interest rates and consumer health, while C is majorly influenced by global trade, international growth and currency/geopolitical trends. In this context, let’s take a closer look to determine which stock provides better value to investors.
The Case for Bank of America
Bank of America, one of the most asset-sensitive banks in America, is likely to witness a modest decline in net interest income (NII) over the medium term as the Federal Reserve starts lowering interest rates. Last week, Fed chairman Jerome Powell signaled a rate cut as early as September amid easing inflation and a weakening labor market.
Nonetheless, the impact of the current rate cut cycle on BAC’s NII is likely to be minimal this year. The company projects NII to rise 6-7% in 2025, reaching $15.5-$15.7 billion in the fourth quarter, even if the central bank initiates rate cuts. This is based on the resilient consumer behavior and steady demand for loans.
Moreover, Bank of America’s aggressive financial center expansion strategy across the United States will solidify customer relationships and tap into new markets, driving NII growth over time. The company continues to align its banking centers according to customer needs. These efforts, along with the success of the person-to-person money transfer system Zelle and the digital financial assistant Erica, will enable BAC to offer enhanced digital services and cross-sell several products, including mortgages, auto loans and credit cards.
The shift toward easier monetary policy is expected to support client activity, deal flow and asset values. Thus, Bank of America’s non-interest income streams will likely see meaningful upside. Lower rates are expected to aid the company’s asset quality, as declining rates will ease debt-service burdens and improve borrower solvency.
As the bank embarks on an ambitious expansion plan to open financial centers in new and existing markets, operating expenses are likely to remain elevated in the near term. BAC expects non-interest expenses to rise moderately in 2025.
The Case for Citigroup
Similar to BAC, Citigroup’s NII is expected to fall marginally as the Fed lowers interest rates. Yet, for this year, the company expects NII (excluding Markets) to grow around 4%, indicating improved loan demand and higher deposit balances.
Further, Citigroup has been emphasizing growth in core businesses by streamlining operations internationally. In sync with this, the company is streamlining globally, exiting consumer banking in 14 Asia and EMEA markets (announced in 2021) and has already exited nine countries. Also, Citigroup is simplifying its organizational structure, cutting 20,000 jobs by 2026, with divestitures and workforce reductions expected to save $2–$2.5 billion annually.
Such moves by Citigroup are likely to free up capital, which will be invested in profitable businesses like wealth management and investment banking. Also, as the Fed cuts interest rates, it will boost deal volume, client engagement and asset value. Hence, these developments will ultimately drive stronger fee income growth.
Additionally, as the company is focusing on a leaner organization structure and reducing global footprint, operating expenses are likely to come down. Citigroup anticipates expenses to be below $53 billion in 2026, excluding FDIC fees, implying a decline from the $56.4 billion in 2023.
C & BAC: Price Performance, Valuation & Other Comparisons
This year, C and BAC shares have risen 37.5% and 14.8%, respectively. This shows investors are steadily gaining confidence in Citigroup’s business transformation plan. Hence, in terms of price performance, C has a clear edge over Bank of America.
YTD Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Citigroup is currently trading at a 12-month forward price-to-earnings (P/E) of 10.8X. BAC stock, in contrast, is currently trading at a 12-month forward P/E of 12.4X.
P/E F12M
Image Source: Zacks Investment Research
Both are trading at a discount compared with the industry’s 12-month forward P/E of 14.8X. So, C is trading at a discount compared with Bank of America.
Bank of America and Citigroup undergo annual stress tests conducted by the Fed before they can announce their capital distribution plans. Following the 2025 stress test, they hiked their dividends. Citigroup raised its quarterly dividend by 7% to 60 cents per share. It has a dividend yield of 2.48%. Likewise, BAC increased its quarterly dividend by 8% to 28 cents per share. It has a dividend yield of 2.06%. Based on dividend yield, C has an edge over BAC.
Dividend Yield
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 10.25% is way higher than Citigroup’s 7.29%. This reflects BAC’s efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for C & BAC?
The Zacks Consensus Estimate for BAC's 2025 and 2026 earnings indicates 12.2% and 16.1% growth, respectively. Bank of America’s earnings estimates for 2025 have been revised upward, while for 2026, estimates have remained unchanged.
BAC Earnings Estimates
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for C’s 2025 and 2026 sales earnings indicates a jump of 27.2% and 28%, respectively. Its earnings estimates for 2025 have remained unchanged, while for 2026, it has been revised slightly upward over the past month.
C Earnings Estimates
Image Source: Zacks Investment Research
BAC or C: Which Stock Deserves a Place in Your Portfolio?
Citigroup’s ongoing restructuring, including exit from non-core consumer markets, 20,000 job cut decision and streamlining of management structure, is freeing up billions in cost savings. These moves allow it to focus on profitable businesses like wealth management and investment banking, positioning it to benefit from rising deal activity and client engagement as interest rates decline.
Moreover, Citigroup’s valuation is attractive, trading at a lower forward P/E than Bank of America while delivering stronger YTD price performance. A higher dividend yield further enhances its appeal, making Citigroup a compelling buy for value-focused investors.
At present, C carries a Zacks Rank #2 (Buy), while BAC has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.