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Citigroup or Bank of America: Which Big Bank is the Better 2026 Bet?
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Key Takeaways
Citigroup earnings are expected to jump 32.3% in 2026, while BAC sees a more modest 14% earnings rise.
C's cost-cutting, exits from 14 markets and AI adoption are likely to save $2-$2.5B in annual expenses by 2026
Over six months, C stock jumped 45.6% vs. BAC's 19.8%, showing confidence in Citigroup's transformation plan.
Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are among the largest U.S. banks, heavily exposed to interest rate cycles, loan growth and global financial markets. They provide 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. Their performance heading into 2026 will reflect macroeconomic trends, Fed policy shifts and evolving capital return strategies. In this context, let’s take a closer look to determine which stock has more room to run.
The Case for Bank of America
Despite being one of the most asset-sensitive banks in America, Bank of America is less likely to witness pressure on its net interest income (NII) in 2026 amid declining interest rates. This is expected to be driven by fixed-rate asset repricing, improving lending scenario, resilient consumers and a gradual fall in funding costs. Further, it is expected to witness decent deposit growth. As such, the company projects a 5-7% year-over-year increase in NII for 2026, after similar growth this year.
Additionally, 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 has entered 18 new markets since 2014 and plans to open financial centers in six additional markets through 2028. This expansion has already added 170 new financial centers and $18 billion in incremental deposits in those markets. The company also plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.
Further, the shift toward easier monetary policy is expected to support client activity, deal flow and asset values. The company plans to use data and AI across lending, risk and advisory to improve efficiency, with growth led by higher-return businesses like middle market, global banking and wealth management, alongside international expansion and broader capital solutions. So, Bank of America’s non-interest income streams will likely see meaningful upside in 2026.
Lower rates are expected to aid BAC’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 and enhance technology usage, operating expenses are likely to remain elevated in the near term.
The Case for Citigroup
As interest rates fall, Citigroup’s NII growth is expected to be under pressure in 2026. Nonetheless, for this year, the company expects NII (excluding Markets) to grow around 5.5%, indicating improved loan demand and higher deposit balances.
Further, CEO Jane Fraser continues to advance Citigroup’s multi-year strategy to streamline operations and focus on its core businesses. Since announcing plans in April 2021 to exit consumer banking in 14 markets across Asia and EMEA, the company has completed its exit in nine countries. These initiatives will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke fee income growth. Supported by these initiatives, Citigroup projects total revenues to exceed $84 billion in 2025, with revenues projected to see a 4-5% CAGR through 2026.
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 in annualized run rate savings by 2026. The company also continues to focus on streamlining processes and platforms and driving automation to reduce manual touchpoints. Citigroup is increasingly deploying artificial intelligence (AI) tools to support these efforts.
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.
At the same time, regulatory pressures are easing. According to a Reuters article, which was published on MSN, the Fed closed long-standing supervisory notices related to Citigroup’s risk management and data governance shortcomings. With this burden lifted, the bank is better-positioned to execute its growth and efficiency initiatives.
How Do Earnings Estimates Compare for BAC & C?
The Zacks Consensus Estimate for BAC's 2025 and 2026 earnings indicates 15.9% and 14% growth, respectively. Bank of America’s earnings estimates for 2025 and 2026 have been revised lower over the past seven days.
BAC Earnings Estimates
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for C’s 2025 and 2026 earnings indicates a jump of 27.6% and 32.3%, respectively. Its earnings estimates for 2025 and 2026 have been revised slightly upward over the past week.
C Earnings Estimates
Image Source: Zacks Investment Research
BAC & C: Price Performance, Valuation & Other Comparisons
Over the past six months, C and BAC shares have risen 45.6% and 19.8%, respectively. This reflects that investors are optimistic about the success of Citigroup’s business transformation plan. Hence, in terms of price performance, C has a clear edge over Bank of America.
Six-Month 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 11.81X. BAC stock, in contrast, is currently trading at a 12-month forward P/E of 12.93X.
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 15.09X. 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 2.03%. Likewise, BAC increased its quarterly dividend by 8% to 28 cents per share. It has a dividend yield of 2.00%. Based on dividend yield, C has a slight edge over BAC.
Dividend Yield
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 10.76% is way higher than Citigroup’s 7.91%. This reflects BAC’s efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
BAC or C: Which Bank Stock is a Smarter Hold Through 2026?
While Bank of America offers stable growth potential and a strong U.S. footprint, Citigroup stands out as the better 2026 investment. Its ongoing transformation, global strategic focus, aggressive cost-cutting and stronger earnings growth expectations position it well for improved profitability.
Trading at a lower valuation and showing superior recent price performance, Citigroup provides more upside potential as it executes on operational efficiency and international wealth growth. With regulatory overhangs easing and revenue momentum building, C stock appears better poised to reward long-term investors heading into 2026.
Image: Bigstock
Citigroup or Bank of America: Which Big Bank is the Better 2026 Bet?
Key Takeaways
Bank of America (BAC - Free Report) and Citigroup (C - Free Report) are among the largest U.S. banks, heavily exposed to interest rate cycles, loan growth and global financial markets. They provide 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. Their performance heading into 2026 will reflect macroeconomic trends, Fed policy shifts and evolving capital return strategies. In this context, let’s take a closer look to determine which stock has more room to run.
The Case for Bank of America
Despite being one of the most asset-sensitive banks in America, Bank of America is less likely to witness pressure on its net interest income (NII) in 2026 amid declining interest rates. This is expected to be driven by fixed-rate asset repricing, improving lending scenario, resilient consumers and a gradual fall in funding costs. Further, it is expected to witness decent deposit growth. As such, the company projects a 5-7% year-over-year increase in NII for 2026, after similar growth this year.
Additionally, 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 has entered 18 new markets since 2014 and plans to open financial centers in six additional markets through 2028. This expansion has already added 170 new financial centers and $18 billion in incremental deposits in those markets. The company also plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.
Further, the shift toward easier monetary policy is expected to support client activity, deal flow and asset values. The company plans to use data and AI across lending, risk and advisory to improve efficiency, with growth led by higher-return businesses like middle market, global banking and wealth management, alongside international expansion and broader capital solutions. So, Bank of America’s non-interest income streams will likely see meaningful upside in 2026.
Lower rates are expected to aid BAC’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 and enhance technology usage, operating expenses are likely to remain elevated in the near term.
The Case for Citigroup
As interest rates fall, Citigroup’s NII growth is expected to be under pressure in 2026. Nonetheless, for this year, the company expects NII (excluding Markets) to grow around 5.5%, indicating improved loan demand and higher deposit balances.
Further, CEO Jane Fraser continues to advance Citigroup’s multi-year strategy to streamline operations and focus on its core businesses. Since announcing plans in April 2021 to exit consumer banking in 14 markets across Asia and EMEA, the company has completed its exit in nine countries. These initiatives will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke fee income growth. Supported by these initiatives, Citigroup projects total revenues to exceed $84 billion in 2025, with revenues projected to see a 4-5% CAGR through 2026.
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 in annualized run rate savings by 2026. The company also continues to focus on streamlining processes and platforms and driving automation to reduce manual touchpoints. Citigroup is increasingly deploying artificial intelligence (AI) tools to support these efforts.
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.
At the same time, regulatory pressures are easing. According to a Reuters article, which was published on MSN, the Fed closed long-standing supervisory notices related to Citigroup’s risk management and data governance shortcomings. With this burden lifted, the bank is better-positioned to execute its growth and efficiency initiatives.
How Do Earnings Estimates Compare for BAC & C?
The Zacks Consensus Estimate for BAC's 2025 and 2026 earnings indicates 15.9% and 14% growth, respectively. Bank of America’s earnings estimates for 2025 and 2026 have been revised lower over the past seven days.
BAC Earnings Estimates
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for C’s 2025 and 2026 earnings indicates a jump of 27.6% and 32.3%, respectively. Its earnings estimates for 2025 and 2026 have been revised slightly upward over the past week.
C Earnings Estimates
Image Source: Zacks Investment Research
BAC & C: Price Performance, Valuation & Other Comparisons
Over the past six months, C and BAC shares have risen 45.6% and 19.8%, respectively. This reflects that investors are optimistic about the success of Citigroup’s business transformation plan. Hence, in terms of price performance, C has a clear edge over Bank of America.
Six-Month 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 11.81X. BAC stock, in contrast, is currently trading at a 12-month forward P/E of 12.93X.
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 15.09X. 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 2.03%. Likewise, BAC increased its quarterly dividend by 8% to 28 cents per share. It has a dividend yield of 2.00%. Based on dividend yield, C has a slight edge over BAC.
Dividend Yield
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 10.76% is way higher than Citigroup’s 7.91%. This reflects BAC’s efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
BAC or C: Which Bank Stock is a Smarter Hold Through 2026?
While Bank of America offers stable growth potential and a strong U.S. footprint, Citigroup stands out as the better 2026 investment. Its ongoing transformation, global strategic focus, aggressive cost-cutting and stronger earnings growth expectations position it well for improved profitability.
Trading at a lower valuation and showing superior recent price performance, Citigroup provides more upside potential as it executes on operational efficiency and international wealth growth. With regulatory overhangs easing and revenue momentum building, C stock appears better poised to reward long-term investors heading into 2026.
At present, both BAC and C carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.