Large-cap banks are well-positioned to outperform the market into 2025 due to accelerating earnings growth, according to an analyst. Citi is expected to reinforce these growth drivers, particularly after achieving its revenue and expense targets in 2024. Forecasts suggest continued organizational improvements for Citi in the years 2025 and 2026, with a notable progression in the bank's return on tangible common equity from its current year-to-date performance towards its medium-term target of 11-12%.

For the banking sector, it is understood that the trends leading into 2025 appear well established. Minor adjustments have been made to earnings models and estimates. Looking ahead to 2028, it is anticipated that banks will aim to maximize growth, constrained by maintaining a return on tangible common equity in the low-to-mid-teens. There's a general skepticism regarding the likelihood of significantly reduced regulatory and capital requirements in the future. The sector is viewed as reasonably valued, yet opportunities for strategic investment remain.

Citi has been classified as a top choice under almost any scenario except a recession. Expectations exceed anticipated expenses, pivotal inflections in returns, potential for growth in book value even during a recession, and the most significant management changes in half a century. Over a three-year span, there is an expectation of doubled stock value based on double earnings with a comparative improvement in EPS, efficiency, and returns twice that of peers.