Per a Form 13-F filing with the Securities and Exchange Commission yesterday, Warren Buffett’s Berkshire Hathaway (BRK.B) fully sold off more than 14.6 million shares of Citigroup C in the first quarter of 2025.
This move was part of a broader reduction in financial sector holdings. Warren Buffett’s Berkshire also trimmed its stakes in Bank of America BAC and Capital One COF. It trimmed Bank of America’s shares by 48.6 million, while it lowered its stake in Capital One by 300,000 shares. As of March 31, 2025, Berkshire held 631.6 million shares of BAC and 7.2 million COF shares.
Many investors follow Buffett and try to match his investing style. So, should you also trim your investment in financial stocks, including Citigroup? Let us have a closer look at C’s fundamentals, performance, growth prospects and valuation metric before deciding the next move.
Citigroup’s Business Restructuring Initiative
C has been emphasizing leaner, streamlined operations to reduce expenses. The transformation process included an organizational restructuring that replaced the reportable segment with five new ones. In January 2024, the company announced its plan to eliminate 20,000 jobs as part of its broad-scale restructuring effort over the next two years.
Citigroup remains on track to cut jobs. So far, the bank had already made significant progress, reducing its headcount by 10,000. In January 2025, citing people familiar with the matter, Blomberg reported that as part of the sweeping reorganization under CEO Jane Fraser to cut expenses, managing directors in the wealth and technology units are leaving the firm, and the company is axing people from a team that compiles data and analysis on the bank's clients.
For 2025, management expects expenses to be below $53.4 billion. In 2024, the company’s expenses were $53.9 billion.
C’s Focus on Core Operations
Citigroup has been focusing on growth in its core businesses by streamlining its overseas operations. In April 2021, the company announced its plan to exit the consumer banking business in 14 markets across Asia and EMEA. Since then, the company has exited consumer businesses in nine countries. It reached a milestone in December 2024 when it completed the separation of its institutional banking operations in Mexico from the consumer, small business and middle-market segments. In June 2024, Citigroup sold its China-based onshore consumer wealth portfolio to HSBC China, a wholly owned subsidiary of HSBC Holdings plc.
As part of its strategy, Citigroup continued to make progress with the wind-downs of its Korea consumer banking operations and its overall operations in Russia, as well as the preparation for a planned initial public offering (IPO) of its consumer banking and small business and middle-market banking operations in Mexico.
These moves by Citigroup are likely to free up capital to invest in higher-return segments like wealth management and investment banking.
Through such efforts, the company expects revenues to see a compounded annual growth rate of 4-5% by 2026-end and will further drive $2-2.5 billion of annualized run rate savings by 2026. Management expects the return on tangible common equity to be 10-11% by 2026.
Citigroup & Interest Rate
With the Federal Reserve cutting interest rates by 100 basis points last year, the company’s net interest income (NII) benefited from it. Given relatively low funding costs, C’s NII improved. In the first quarter of 2025, Citigroup reported an NII of $14 billion, marking a 4% increase from the prior-year quarter.
Similarly, Capital One’s first-quarter NII improved 7% year over year. Also, Bank of America’s NII rose 3% year over year. Now, given market uncertainty, the Fed kept the interest rates steady at 4.25-4.5% at the May 6-7 FOMC meeting. Further, the Fed Chair Jerome Powell noted that there is no “need to be in a hurry” to make any monetary policy change until there is clarity on the impacts of Trump's tariffs on employment and inflation. As such, interest rates are likely to stay higher for a longer time.
Nonetheless, Citigroup is expected to witness an improvement in NII in 2025, given decent loan demand and higher deposit balances. The company projects NII (ex-Markets) to rise 2-3% in 2025 from the 2024 reported level.
C’s Decent Liquidity & Capital Position
Citigroup enjoys a strong liquidity position. As of March 31, 2025, C’s cash and due from banks and total investments aggregated to $761 billion, whereas its total debt (short-term and long-term borrowing) was $317.4 billion.
C's average Liquidity Coverage Ratio stood at 117% for the quarter ended March 31, 2025. The common equity tier (CET) 1 capital ratio was 13.5% as of March 31, 2025. The company’s focus on maintaining a strong capital base will support its capital distribution activities.
In July 2024, the company hiked its quarterly dividend by 6% to 56 cents per share. It also has a share repurchase plan in place. On Jan. 13, 2025, Citigroup's board of directors approved a $20-billion common stock repurchase program with no expiration date. The bank repurchased $1.75 billion of common shares in the first quarter of 2025 and targets a similar level of share repurchases in the second quarter. As of March 31, 2025, it has nearly $18 billion of stocks available under the plan.
C shares have gained 20% compared with the S&P 500 index's growth of 11.9% and the Zacks finance sector rise of 9.1% over the past month. Bank of America has gained 17.3% and Capital One has risen 20.4% over the same time frame.
Price Performance
Zacks Investment Research
Image Source: Zacks Investment Research
From a valuation standpoint, C appears inexpensive relative to the industry. It is currently trading at a discount with a forward 12-month price-to-earnings (P/E) of 9.50X, well below the industry average of 13.80X.
Price-to-Earnings F12M
Zacks Investment Research
Image Source: Zacks Investment Research
BAC is trading at a 12-month forward P/E of 11.42X, whereas COF is trading at 12.08X. Hence, Citigroup is trading at a discount compared with both.
Should You Sell or Hold C Stock
Citigroup’s business restructuring efforts and emphasis on its core operations by divesting non-core units provide a solid foundation for growth, supporting its financials. Also, its strong liquidity position will support capital distribution activities.
Given the improvement in NII, along with decent loan demand, the company’s financials will likely witness growth in the upcoming period.
Sales Estimates
Zacks Investment Research
Image Source: Zacks Investment Research
Earnings Estimates
Zacks Investment Research
Image Source: Zacks Investment Research
While Buffett's exit may raise questions, Citigroup's ongoing restructuring efforts and favorable growth projections suggest the potential for long-term growth. Hence, it is advisable to hold the C stock for now.
At present, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
