Citigroup (C) passes 2025 Fed stress test with strong capital ratio and liquidity position

From Zacks Investment Research: 2025-06-30 12:46:00

Citigroup Inc. (C) passed the 2025 Fed stress test with a CET1 capital ratio of 10.4%, well above the minimum requirement of 4.5%. The bank approved a $20B buyback plan and raised its dividend by 6% in July 2024. C is cutting 20,000 jobs and exiting non-core markets to focus on higher-return areas. Along with 21 other banks, including Bank of America and Wells Fargo, C cleared the stress test scenario which simulated a severe recession. Citigroup’s liquidity position is strong with $761 billion in cash. C is focusing on core operations and expects improved performance in the second quarter of 2025.

Citigroup’s share repurchase plan includes $20 billion authorized for buybacks with no expiration. The bank is targeting a similar level of repurchases in the second quarter, leaving nearly $18 billion available. C’s NII improved in the first quarter of 2025. With the expectation of two rate cuts this year, lending activities and NII are expected to improve. Citigroup’s stock has outperformed its peers in the past six months and is currently trading at a discounted valuation compared to the industry average. The bank’s earnings estimates for 2025 have been revised downward, but upward for 2026.

Citigroup’s near-term outlook depends on managing macroeconomic and operational challenges. While it may not be the ideal time to buy the stock, long-term investors with existing holdings may find value in maintaining their stake. Citigroup currently holds a Zacks Rank #3 (Hold).



Read more at Zacks Investment Research: C Clears 2025 Fed Stress Test: Make Investment or Still Wait? – June 30, 2025