Analysts Reassess Big U.S. Bank Prospects

Citigroup’s Results Reinforce Restructuring Story

Citigroup’s latest quarterly update has become a fresh test of its multi‑year restructuring and capital optimization strategy. The bank reported adjusted earnings per share of $1.81, beating analysts’ expectations of $1.70, and prompted RBC Capital to reaffirm its Outperform rating and $121 price target on January 15. Management reiterated confidence in achieving a medium‑term Return on Tangible Common Equity (ROTCE) of 10–11% in 2026, compared with a projected 7.7% in 2025, framing disciplined expense control and modest revenue growth as the main levers.

Citigroup’s Services division remains its standout franchise, delivering a 36% ROTCE, ahead of U.S. Personal Banking at 14% and Banking at 13%. RBC Capital views these segment dynamics, together with ongoing simplification of the business, as central to meeting the bank’s financial targets. The firm stresses, however, that execution will be critical as Citigroup seeks to translate its restructuring into sustained profitability improvement and narrower valuation discounts versus peers.

Recent commentary highlights how Citi’s stock performance over the past year has begun to validate the turnaround narrative. The bank has exited non‑core consumer markets, consolidated operations and simplified its global footprint, which, alongside higher interest rates, has supported earnings and driven a double‑digit percentage gain in the share price over twelve months. This has shifted perceptions from a purely speculative turnaround to a restructuring story in progress, even as the valuation gap to other large U.S. banks has only partially closed.

Strategic Refocus, Capital Plans and Analyst Views on Citi

Citigroup’s current strategy centers on simplifying its portfolio, focusing on capital‑light, fee‑rich institutional and wealth businesses, and modernizing technology. The bank continues to wind down or sell international consumer operations while deepening its emphasis on treasury and trade solutions, securities services and cross‑border payments. Management has tied restructuring to cost‑saving targets, headcount reductions and technology streamlining, while also committing to invest in key institutional capabilities.

On recent earnings and capital calls, Citi emphasized maintaining a robust Common Equity Tier 1 buffer while returning capital through dividends and share repurchases. This balance reflects regulatory scrutiny of its global footprint and past risk‑control issues, but the bank signaled confidence that it can pursue both prudence and shareholder distributions. Wall Street firms including Goldman Sachs, JPMorgan and Morgan Stanley have become incrementally more constructive, generally assigning Buy, Overweight or Neutral ratings with price targets that assume moderate upside, contingent on continued execution and orderly credit trends.

Analysts frame Citi as a capital‑return and self‑help story rather than a high‑growth outlier. Consensus suggests the stock remains cheaper than major peers but less deeply discounted than a year ago, with potential further rerating depending on efficiency gains, credit quality and macro conditions such as the pace of interest‑rate cuts. Investors are watching efficiency ratios, capital levels and stress‑test outcomes, as well as credit performance in cards and commercial exposures, for evidence that the restructuring is translating into durable financial improvement.

Capital One Outlook Balances Upside and Regulation

Capital One Financial is also drawing renewed analyst attention, though for different reasons. On January 12, JPMorgan raised its price target on the stock to $256 from $237 while maintaining a Neutral rating. The move came in the wake of President Trump’s proposal to cap credit card interest rates at 10% for a year, a measure JPMorgan believes would fundamentally reshape the card industry by sharply reducing issuer profitability and constraining consumer access to credit if implemented.

JPMorgan characterizes the proposal as a high‑severity but low‑probability risk, likely to face significant legal challenges, and has incorporated this regulatory overhang into its neutral stance. Separately, BTIG increased its Capital One price target in late December to $308 from $264 and reaffirmed a Buy rating, naming the company its top pick for the first half of 2026. BTIG sees a bull‑case scenario in which the stock could reach $450, even as some investors remain cautious about the benefits of the pending Discover deal.

Capital One operates as the financial services holding company for Capital One, National Association, offering a range of financial products and services across the United States, Canada and the United Kingdom. Analyst commentary suggests the stock retains meaningful upside potential, but sentiment is tempered by uncertainty around regulatory initiatives targeting credit card pricing and by ongoing debate about the strategic and financial impact of the Discover transaction.