Citigroup vs. JPMorgan: Which Banking Giant Offers the Better Upside?

Citigroup, Inc. C and JPMorgan Chase JPM are major players in the U.S. financial sector, but they represent very different investment profiles. Both are deeply involved in investment banking, trading and consumer finance, and are currently navigating rising credit risks and macroeconomic uncertainty.Let us delve deeper and assess the long-term growth and earnings potential of each bank.The Case for JPMorganJPM is expanding its footprint in new regions despite the rise of mobile and online banking. It is expanding its affluent banking services by opening 14 J.P. Morgan Financial Centers across California, Florida, Massachusetts and New York. The company plans to nearly double the figure by 2026. Also, it plans to open more than 500 branches by 2027, with 150 already built in 2024. This initiative aligns with the company’s broader effort to tailor its branch network to client needs, combining digital tools, expert guidance and an expansive physical footprint.With the Federal Reserve expected to keep interest rates steady in the near term because of tariff-related concerns, relatively high rates will likely support JPMorgan’s net interest income (NII) and net yield on interest-earning assets as funding and deposit costs gradually stabilize. The company’s NII is expected to be $94.5 billion in 2025 (up almost 2% year over year).JPM continues to be a dominant player in the investment banking (IB) business, holding the top position for global IB fees. While the company’s capital markets performance was decent in the first quarter of 2025, short-term IB prospects appear uncertain due to economic instability. The company projects IB fees in the Commercial & Investment Bank segment to decline in the mid-teens range from the $2.46 billion registered in the same quarter last year.JPMorgan remains vigilant about the effects of continuous high rates and quantitative tightening on its loan portfolio. As such, the company’s asset quality is likely to remain under pressure in the near term. JPM expects card net charge-off (NCO) rates to be 3.6% this year, with the metric expected to rise to 3.6-3.9% in 2026.The Case for CitigroupC has been emphasizing leaner, streamlined operations to reduce costs. The transformation process included an organizational restructuring and the elimination of 20,000 jobs by 2025. The company has been focusing on growth in its core businesses by streamlining its overseas operations. In April 2021, it announced its plan to exit the consumer banking business in 14 markets across Asia and EMEA.In sync with this, last month, Citigroup, through its subsidiary Citibank Europe Plc, announced that Citi Handlowy agreed to sell its consumer banking business in Poland. The company has already exited from Australia, Bahrain, India, Indonesia, Malaysia, the Philippines, Taiwan, Thailand and Vietnam.As part of its strategy, Citigroup continues 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 of its consumer banking and small business and middle-market banking operations in Mexico.This strategic simplification not only reduces operational risks but also frees up capital to reinvest in high-return segments like IB and wealth management.Citigroup expects the performance of its Markets and Banking segments to improve in the second quarter of 2025. The bank projects markets revenues to grow in the mid to high-single-digit range on a year-over-year basis and IB revenues are expected to increase in the mid-single-digit percentage. The company anticipates an improvement in NII in 2025, given decent loan demand and higher deposit balances. It projects NII (ex-Markets) to rise 2-3% year over year in 2025.C expects the second-quarter cost of credit to be “up a few hundred million” sequentially, driven by higher credit reserve build. The company is facing higher credit costs, but with active reserve building and reduced exposure to underperforming regions, it is taking proactive steps to strengthen its portfolio.C & JPM: Price Performance, Valuation & Other ComparisonsIn the past year, C and JPM shares have risen 34.3% and 41.8%, respectively, compared with the industry’s growth of 32.7%Price Performance Image Source: Zacks Investment Research In terms of valuation, Citigroup is currently trading at a 12-month forward price-to-earnings (P/E) of 9.28X, higher than its five-year median of 8.45X. Conversely, JPMorgan’s stock is currently trading at a 12-month forward P/E of 14.05X, which is higher than its five-year median of 12.25X.Price-to-Earnings F12M Image Source: Zacks Investment Research Citigroup is trading at a discount compared with the industry average of 13.53X. Also, the stock is inexpensive compared with JPMorgan.Additionally, C and JPM reward their shareholders handsomely. Citigroup hiked its quarterly dividend  6% to 56 cents per share in July 2024. It has a dividend yield of 2.93%. JPM increased its quarterly dividend 12% to $1.40 per share in March 2025. It has a dividend yield of 2.11%. Based on dividend yield, C has an edge over JPM.Dividend Yield Image Source: Zacks Investment Research Both companies have a share repurchase plan. On Jan. 13, 2025, Citigroup's board of directors approved a $20-billion common stock repurchase program with no expiration date. As of March 31, 2025, it had nearly $18 billion of stocks available under the plan. After clearing the 2024 stress test, JPM authorized a share repurchase program of $30 billion. As of March 31, 2025, $11.7 billion in authorization remained available.How Do Estimates Compare for C & JPM?The Zacks Consensus Estimate for JPMorgan’s 2025 sales suggests a year-over-year decline of 1.8%, while that for 2026 sales implies a year-over-year rise of 2%. Likewise, the consensus estimate for 2025 earnings implies a year-over-year fall of 6.8%, while that for 2026 earnings indicates a 5.3% rise. Its earnings estimates for 2025 and 2026 have been revised upward over the past 30 days.JPM's Estimate Revision Trend Image Source: Zacks Investment Research The Zacks Consensus Estimate for C’s 2025 and 2026 sales suggests year-over-year growth of 3.2% and 3.1%, respectively. Likewise, the consensus estimate for 2025 and 2026 earnings indicates a jump of 24.2% and 24.8%, respectively. Its earnings estimates for 2025 and 2026 have been revised upward over the past month.C's Estimate Revision Trend Image Source: Zacks Investment Research JPM or C: Which Stock Belongs in Your Portfolio?While JPMorgan remains a dominant force in U.S. banking with its broad diversification and scale, its near-term prospects are clouded by softening IB activity, cautious NII guidance and rising credit costs. In contrast, Citigroup is executing a bold transformation, streamlining its global footprint, and reallocating resources toward high-growth, high-return areas.Supported by improving earnings estimates, a discounted valuation and a comparatively higher dividend yield, Citigroup offers a more attractive risk-reward profile for long-term investors. By streamlining its operations and capitalizing on momentum in key areas like markets and IB, the company is not merely adapting to economic uncertainty; it is turning the situation into a strategic advantage for long-term growth.Hence, for investors seeking growth with a healthy dividend and a discounted entry point, Citigroup is the more compelling play.C and JPM currently carry a Zacks Rank #3 (Hold). 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(JPM): 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