We recently published a list of 10 Best Bank Stocks to Buy in 2025. In this article, we are going to take a look at where Citigroup Inc. (NYSE:C) stands against other best bank stocks to buy in 2025.
2024 was a stellar year for banking giants in the United States. According to a report in the Financial Times, the seven largest banks in the country by deposits accounted for 56% of the industry’s profits during the first nine months of the year, up from 48% during the same period in 2023.
Among these, the four biggest banks collectively reported around $88 billion in profits between January and September 2024, representing 44% of the American banking industry’s profits. This puts them on course to grab their largest industry share since 2015.
READ ALSO: 10 Best Bank Penny Stocks to Buy According to Hedge Funds and 10 Best Financial Stocks To Buy According to Hedge Funds.
The Federal Deposit Insurance Corporation (FDIC) has stated that equity capital increased by 3.5% in Q3 2024 to $81.6 billion, reflecting the growing capitalization in American banks. In November, the Federal Reserve Board found that 99% of the country’s banks reported capital above the regulatory requirements. This significant improvement from 2020 highlights the banking industry’s collective ability to sustain unforeseen losses.
Credit rating agency, Moody’s, has also upgraded the global banking industry from negative to stable for the first time since 2023, citing monetary adjustments and interest rate cuts among G-20 countries as reasons behind the upgrade. On December 18, the Federal Reserve announced the third cut for the year, reducing the central bank’s target interest rate by a quarter-point to between 4.25% and 4.5%.
Trump’s victory in the US presidential elections has raised hopes of lax regulations in the financial sector amid growing concerns about antitrust scrutiny and capital requirements slowing down investment banking and lending revenues. While the President-elect has yet to name his picks to head the country’s banking agencies, potential nominees are already hinting at pulling back regulations.
Financial analysts believe reduced oversight and a business-friendly environment are likely to drive revenues and loan growth and improve banks’ bottom line. At the same time, they also warn of the risks ongoing geopolitical conflicts can have on the general outlook of the global economy.
Increasing trade tensions, with growing protectionist policies can also hurt investment flows in 2025. Following his election victory, Trump has vowed to impose steep tariffs on imports from Canada, China, and Mexico, which could increase costs for manufacturers. The 78-year-old last month also threatened the EU with tariffs if it does not buy more oil and gas from the United States.
Methodology
For this article, we sampled stocks from an ETF issued by Invesco with exposure to banking companies. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best bank stocks to buy in 2025 have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is an American multinational investment banking and financial services company, headquartered in New York City. It is the third-largest banking institution in the United States by assets and enjoys a vast global footprint with an on-the-ground presence in over 90 countries.
Over the past three years, the bank has seen its revenue record double-digit growth in the Middle East and Africa region, which was also the fastest growing cluster for Citigroup Inc. (NYSE:C) globally during this period. Despite economic and geopolitical headwinds, the company is seeing immense growth in the region on the back of strong FDI inflows.
In late November, the bank received approval from Saudi Arabia to establish its regional headquarters in the bustling capital city of Riyadh. This marks a significant step for the company in its bid to further solidify its position in the region. Citigroup Inc. (NYSE:C)’s share price has grown by 5% since the announcement.
The bank has also been undergoing strategic repositioning. As part of these efforts, in December, it successfully separated its institutional banking business from its consumer, small, and middle market entities in Mexico. The separation is an important milestone in Citigroup Inc. (NYSE:C)’s quest to simplify the firm and have a bank that is more focused on its core offerings.
Citigroup’s financial position remains robust. During the third quarter of 2024, the company experienced revenue growth and positive operating leverage across all its businesses. Revenue grew 3% during the quarter, ex-divestitures. Net income was reported at $3.2 billion, down from $3.5 billion during the same period last year, due to higher cost of credit. Despite that, the bank beat earnings estimates by 20 cents.
Citigroup Inc. (NYSE:C) is one of the best bank stocks to buy in 2025, based on hedge fund sentiment. According to Insider Monkey’s database for Q3 2024, 88 hedge funds had investments in the company, up from 85 at the end of Q2. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 9%.
Overall, C ranks 3rd on our list of best bank stocks to buy in 2025. While we acknowledge the potential of banking companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than C but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
