Wells Fargo vs. Citibank: Which Bank Stock is a Better Buy?

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© Reuters. Wells Fargo vs. Citibank: Which Bank Stock is a Better Buy?

The banking industry was hit severely by the COVID-19 pandemic and a near-zero interest rate environment last year. Although the interest rate environment remains essentially the same, many banks are showing signs of recovery based on increasing economic and capital market activity. For example, both Wells Fargo (NYSE:) and Citi (C) reported impressive results in their last reported quarter. But let’s find out which of these two stocks is a better buy now. Read on.Wells Fargo & Company (WFC) and Citigroup , Inc. (NYSE:) are two of the biggest banks in the United States. WFC offers its services under three categories—personal, small business and commercial. Its operating segments include community banking, wholesale banking, and wealth and investment management. C provides a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management.

While most financial services companies took a hit from the pandemic-led economic slowdown and the Fed’s decision to keep benchmark interest rates near zero to support the economy, many of them are seeing a solid recovery this year with the revival of economic and capital market activities.

Increased investor interest in the financial sector is evidenced by the Financial Select Sector SPDR Fund’s (XLF) 12.1% returns over the past three months versus the SPDR S&P 500 ETF Trust’s (SPY) 7.4% gains over the period. Since the financial sector is expected to do well with increasing economic activity and heightened demand for loans, both WFC and C are expected to gain in the near- to mid-term.

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