Citigroup or Wells Fargo: Which Bank Stock Has More Upside in 2026?

A few major players dominate the U.S. banking sector, among which Citigroup Inc. C and Wells Fargo & Company WFC are prominent. Both have remained the key competitors in the banking sector, and faced challenges and opportunities influenced by economic conditions and internal strategies.While Wells Fargo is emerging from years of regulatory constraints with renewed balance-sheet flexibility, Citigroup is approaching a critical inflection point in its multi-year restructuring journey. Against this backdrop, a closer comparison of WFC and C’s strategies, financial outlooks and valuations reveals which stock may offer more compelling upside potential in the year ahead.Citigroup & Wells Fargo: 2 Banking Giants, 2 StrategiesC and WFC are taking different approaches to strengthen their operations and unlock growth opportunities.Citigroup has been betting on leaner, streamlined operations. The company is emphasizing growth in core businesses through restructuring operations internationally. In April 2021, C announced the 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.In December 2025, Citigroup entered an agreement to sell its Russia-based banking unit, AO Citibank, to Renaissance Capital. The same month, Citigroup divested a 25% stake in Banamex to a Mexican business leader after separating its Mexican institutional banking business from consumer and middle-market units in December 2024. The company is now preparing for a planned initial public offering (“IPO”) of its Mexican consumer and small and middle-market banking units. These initiatives will free up capital and help the company pursue investments in wealth management and IB operations, which will stoke fee income growth.Conversely, Wells Fargo has been exiting non-core, lower-return businesses to sharpen its focus on consumer banking, commercial lending, and other high-return areas. Under CEO Charlie Scharf since 2019, the strategy targets up to $10 billion in annual cost cuts and capital reallocation to core franchises. In line with this effort, WFC agreed in May 2025 to sell its rail lease portfolio to a GATX–Brookfield joint venture. Earlier, in March 2025, the bank sold its non-agency third-party commercial mortgage servicing business to Trimont, backed by Varde Partners, reducing exposure to operationally complex CRE servicing.Wells Fargo reached a milestone in June 2025 when the Federal Reserve lifted the asset cap imposed in 2018 following the bank’s fake account scandal. The removal eliminates a long-standing constraint on balance-sheet expansion, allowing the company to grow deposits, increase loan balances and expand securities holdings, thereby unlocking its full operating potential.With greater strategic flexibility and improved earnings visibility, WFC’s management raised the company’s medium-term return on tangible common equity (ROTCE) target to 17-18% from the earlier 15%, indicating stronger profitability prospects over the next few years.Citigroup vs. Wells Fargo: 2 Banks, 1 Fed PivotIn 2025, the Federal Reserve lowered interest rates by 75 basis points (bps), following a 50-bps cut in 2024. Lower rates support net interest income (NII) growth, a critical earnings driver for banks like WFC and C, as funding pressure eases. While lower benchmark rates can compress yields on loans and securities, improving the lending backdrop and higher refinancing will help offset this. Also, relatively lower rates will increase borrowing and boost market liquidity, driving higher deal volumes and trading opportunities. This will support investment banking (IB) and trading businesses for both companies.In 2025, Citigroup’s NII rose 11% year over year in 2025. Meanwhile, Wells Fargo’s NII grew marginally year over year.Wells Fargo expects 2026 NII to be $50 billion, up from $47.8 billion in 2025. This outlook is supported by balance-sheet growth, a favorable loan and deposit mix and continued fixed-asset repricing, partially offset by the impacts of expected rate cuts. Then again, Citigroup’s NII (excluding Markets) is projected to rise 5-6% on a year-over-year basis in 2026.WFC & C’s Expense Management EffortsAs the banking industry adapts to rising expenses, shifting customer preferences and ongoing digital disruption, Citigroup and Wells Fargo are sharpening their focus. However, their approaches to expense management reflect two different paths.Citigroup is not just trimming around the edges; it is undergoing a full-fledged transformation under the leadership of CEO Jane Fraser. The company is overhauling its operating model, simplifying reporting structures, reducing headcounts and streamlining operations. Driven by these efforts, management expects to achieve $2-$2.5 billion of annualized run rate savings by 2026.Wells Fargo, alternatively, is taking a more balanced approach to its operations. While the bank is reducing headcount and streamlining processes, it is also investing in its branch network and upgrading digital tools to augment the customer experience. This allows the bank to maintain a focus on cost management while enhancing customer service and accessibility. Given strategic efforts, management expects its non-interest expenses to be $54.7 billion in 2026, suggesting a decline from the $54.8 billion reported in 2025.C & WFC’s Stock Performance, Valuation & Other ComparisonsIn the past year, Wells Fargo shares have gained 11.7%, whereas Citigroup’s stock has 39.5%. In comparison, the industry has risen 20.6%.Price Performance Image Source: Zacks Investment Research In terms of valuation, Citigroup’s trailing 12-month price-to-earnings (P/E) ratio is 11.1X, while Wells Fargo’s is 12.6X. Both stocks are trading at a discount compared with the industry’s trailing 12-month P/E ratio of 14.5X, but C stock is cheaper than WFC.Price-to-Earnings F12M Image Source: Zacks Investment Research Additionally, both companies regularly pay out dividends. WFC has a dividend yield of 2.05% while C has a dividend yield of 2.1%. Here, also, C holds an edge over WFC.Dividend Yield Image Source: Zacks Investment Research How Do Estimates Compare for Citigroup & Wells Fargo?The Zacks Consensus Estimate for C’s 2026 sales and EPS implies year-over-year increases of 5.2% and 27.7%, respectively. EPS estimates for 2026 have been revised upward over the past month.Estimate Revision Trend Image Source: Zacks Investment Research The Zacks Consensus Estimate for WFC’s 2026 sales and EPS implies year-over-year rallies of 5.5% and 9.9%, respectively. EPS estimates for 2026 have been revised downward over the past month.Estimate Revision Trend Image Source: Zacks Investment Research Conclusion: Citigroup Has the Edge in 2026While both Citigroup and Wells Fargo are well-positioned to benefit from a more accommodative Federal Reserve and a stabilizing macro backdrop, Citigroup stands out as the stock with greater upside potential in 2026.Citigroup’s multi-year transformation is now reaching an inflection point. Its aggressive exit from lower-return international consumer businesses, the monetization of non-core assets like Banamex, and the planned IPO of its Mexican consumer unit are collectively freeing up capital and sharpening strategic focus. These actions position Citigroup to reinvest in higher-margin areas such as wealth management, investment banking, and markets — businesses that should benefit disproportionately from improving capital markets activity and rising deal volumes.Financially, the upside is more compelling. C trades at a lower valuation than Wells Fargo, yet offers significantly stronger EPS growth expectations for 2026, supported by improving operating leverage and meaningful cost savings from its restructuring efforts. Wells Fargo’s asset-cap removal and higher ROTCE target are undeniably positive and should drive steady, lower-risk growth. However, much of this optimism appears increasingly priced in after its recent rally. By contrast, Citigroup’s transformation-driven re-rating story is still unfolding, leaving more room for multiple expansion alongside earnings growth.Hence, for investors looking for higher upside rather than stability alone, Citigroup’s improving fundamentals, cheaper valuation and stronger earnings momentum make it the more attractive bet for now.At present, Citigroup sports a Zacks Rank #1 (Strong Buy) and WFC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.SeeWant 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 Wells Fargo & Company (WFC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks