Citigroup Inc. (NYSE: C) shares climbed more than 4% to close at $114.34 on Feb. 25, 2026, extending recent gains as investors cheered accelerated progress in the bank's multi-year transformation strategy, including a major step toward divesting its Mexican retail operations and ongoing capital enhancements from asset sales.

Citigroup was among the large banks to see earnings lifted by funds that had been set aside in case of bad loans

The rally followed Citigroup's Feb. 23 announcement that it had secured agreements with institutional investors and family offices to sell an aggregate 24% equity stake in Grupo Financiero Banamex for approximately $2.5 billion (MXN 43 billion). The deals, at a fixed price implying about 0.85x local GAAP book value and 1.01x tangible book value, advance CEO Jane Fraser's priority of fully exiting the Mexican consumer and small business banking unit. Upon closing—expected in 2026 and subject to antitrust approval—Citi will have divested 49% of Banamex, with no additional sales anticipated this year to allow the buyer group time to drive value.

The Banamex transaction builds on other recent capital-positive moves. Citigroup completed the sale of its Russian operations earlier in February, bolstering its capital position amid geopolitical pressures. The bank also fully redeemed $2.3 billion in Series X preferred stock on Feb. 18 and announced a $60 billion, five-year "Blueprint for Housing Opportunity" initiative on Feb. 24, committing financing to create or preserve 250,000 affordable U.S. housing units alongside $50 million in philanthropic grants through the Citi Foundation.

These developments underscore Fraser's overhaul, launched in 2024, which targets simplified operations, cost discipline and higher returns. The bank aims for 4-5% revenue compound annual growth rate (CAGR) through 2026, $2-2.5 billion in annualized expense savings and a return on tangible common equity (RoTCE) of 10-11% in 2026, with potential for higher levels thereafter. Management expects positive operating leverage again this year, with an efficiency ratio around 60%.

Following the stronger-than-expected Q4 2025 results reported Jan. 14, 2026, Citigroup demonstrated resilience. Adjusted earnings per share beat estimates at $1.81 versus $1.67 expected, driven by higher net interest income and lower-than-anticipated loan loss provisions. Revenue reached $19.9 billion (adjusted $21.0 billion), with investment banking fees surging 35% and wealth management up 7%. Net income was $2.5 billion, or $1.19 per diluted share, though down from prior year due to a Russia-related charge; excluding that, results were robust.

Guidance for 2026 remains constructive: Net interest income ex-markets projected to rise 5-6%, with continued benefits from the investment portfolio rolling into higher yields. The bank highlighted momentum in services, banking and wealth segments, including record M&A advisory revenue in 2025.

Trading activity reflected optimism. On Feb. 25, shares opened at $111.32, hit a high of $114.51 and low of $110.83 on volume of about 13.6 million shares—near the 14 million daily average. The close marked a 4.36% gain, pushing year-to-date performance solidly positive after a volatile start to 2026. The stock trades near its 52-week high of $125.16 (reached Feb. 9) and well above the low of $55.51 from April 2025, reflecting a strong recovery from prior underperformance.

Analysts have grown more favorable. Morgan Stanley named Citigroup a top bank pick earlier in February, citing transformation progress. Consensus targets hover around $134-135, implying 15-18% upside from current levels. Valuation metrics show a forward P/E near 16, with a dividend yield of about 2.1% (quarterly $0.60, ex-date Feb. 2, payable Feb. 27). The common equity tier 1 ratio stood at 13.2% post-Q4, supporting further shareholder returns.

Challenges persist. Ongoing restructuring includes job reductions (targeting 20,000 cuts by 2026) and regulatory scrutiny. Broader sector dynamics—interest rate paths, credit quality and geopolitical risks—could influence performance. Yet, the Banamex stake sale and Russia exit provide tangible capital recycling, reducing exposure to higher-risk markets.

Citigroup also remains active in structured products, recently issuing notes linked to indices like the Russell 3000, S&P 500 and QQQ, alongside auto-callable securities. These reflect steady capital markets activity amid client demand.

As Fraser's strategy enters its final phases, 2026 is shaping up as a pivotal year for proving execution. With visible momentum, cost discipline and strategic divestitures, Citigroup appears positioned for improved profitability and shareholder value, even as peers like Goldman Sachs vie for transformation leadership.

Investors will watch upcoming Q1 earnings (expected mid-April) for updates on Banamex closings, expense trends and RoTCE trajectory. For now, the stock's recent strength signals market confidence in the bank's path to higher, more sustainable returns.