This article looks at the 10 best bank stocks to buy in 2025. We also discuss the banking industry’s mixed outlook amid monetary adjustments and Trump’s return to the White House.
2024 was a stellar year for banking giants in the United States. According to a report in the Financial Times, the seven largest banks in the country by deposits accounted for 56% of the industry’s profits during the first nine months of the year, up from 48% during the same period in 2023.
Among these, the four biggest banks collectively reported around $88 billion in profits between January and September 2024, representing 44% of the American banking industry’s profits. This puts them on course to grab their largest industry share since 2015.
READ ALSO: 10 Best Bank Penny Stocks to Buy According to Hedge Funds and 10 Best Financial Stocks To Buy According to Hedge Funds.
The Federal Deposit Insurance Corporation (FDIC) has stated that equity capital increased by 3.5% in Q3 2024 to $81.6 billion, reflecting the growing capitalization in American banks. In November, the Federal Reserve Board found that 99% of the country’s banks reported capital above the regulatory requirements. This significant improvement from 2020 highlights the banking industry’s collective ability to sustain unforeseen losses.
Credit rating agency, Moody’s, has also upgraded the global banking industry from negative to stable for the first time since 2023, citing monetary adjustments and interest rate cuts among G-20 countries as reasons behind the upgrade. On December 18, the Federal Reserve announced the third cut for the year, reducing the central bank’s target interest rate by a quarter-point to between 4.25% and 4.5%.
Trump’s victory in the US presidential elections has raised hopes of lax regulations in the financial sector amid growing concerns about antitrust scrutiny and capital requirements slowing down investment banking and lending revenues. While the President-elect has yet to name his picks to head the country’s banking agencies, potential nominees are already hinting at pulling back regulations.
Financial analysts believe reduced oversight and a business-friendly environment are likely to drive revenues and loan growth and improve banks’ bottom line. At the same time, they also warn of the risks ongoing geopolitical conflicts can have on the general outlook of the global economy.
Increasing trade tensions, with growing protectionist policies can also hurt investment flows in 2025. Following his election victory, Trump has vowed to impose steep tariffs on imports from Canada, China, and Mexico, which could increase costs for manufacturers. The 78-year-old last month also threatened the EU with tariffs if it does not buy more oil and gas from the United States.
With that said, let’s shift focus and discuss the best bank stocks to buy in 2025.
A shot of customers at an ATM, symbolizing the company’s convenient banking services.
Methodology
For this article, we sampled stocks from an ETF issued by Invesco with exposure to banking companies. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 900 prominent hedge funds as of Q3 2024. The 10 best bank stocks to buy in 2025 have been ranked in ascending order based on the number of hedge funds holding stakes in them. Where two or more stocks were tied on hedge fund sentiment, we used a higher market cap as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Bank Stocks to Buy in 2025:
10. Citizens Financial Group, Inc. (NYSE:CFG)
Number of Hedge Fund Holders: 46
Citizens Financial Group, Inc. (NYSE:CFG) is an American bank holding company, headquartered in Providence, Rhode Island, that owns the Citizens Bank. The company operates through the consumer banking and commercial banking segments. It has a massive presence across the United States with around 1,100 branches and over 3,000 ATMs.
On October 16, CFG declared financial results for the third quarter of fiscal 2024. It generated a net income of $392 million, translating to an EPS of 79 cents. The return on tangible common equity (ROTCE) stood at 9.7%. Deposits climbed to $5.6 billion, up 40% sequentially. Whereas, assets under management reached $4.1 billion during the quarter. CFG’s private banking segment achieved breakeven in August and September. It is projected to start adding to earnings in Q4.
Citizens Financial Group, Inc. (NYSE:CFG)’s balance sheet remains strong, with a CET1 ratio of 10.6% reflecting its solid capital position. The company returned $516 million to shareholders in Q3, including purchasing $325 million in stock. During the earnings call, CFG announced a quarterly dividend of $0.42 per share to be paid on November 13.
Given its impressive capital position and bullish forecasts for the fourth quarter, Wall Street analysts have a consensus Buy rating for Citizens Financial Group, Inc. (NYSE:CFG), with an average share price upside potential of 9.35%.
According to Insider Monkey’s database for Q3 2024, 46 hedge funds hold a stake in CFG, making it one of the best bank stocks to buy in 2025. AQR Capital Management is the largest investor in the company, with holdings valued at over $189 million, as of September 30, 2024.
9. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 46
U.S. Bancorp (NYSE:USB) is an American bank holding company that owns the U.S. Bank National Association. It offers a broad spectrum of financial services to individuals, businesses, government entities, and other financial institutions in the United States. The company is headquartered in Minneapolis, Minnesota. It is one of the best bank stocks to buy in 2025.
On October 30, USB announced structural changes for its payments business, organizing it into two divisions – Payments: Merchant and Institutional (PMI) and Payments: Consumer and Small Business (PCS). Chairman and CEO Andy Cecere believes these changes, which have been made to prepare for the retirement of VC Payment Services, would also help in accelerating U.S. Bancorp (NYSE:USB)’s growth strategy and capitalize on the returns from its recent investments.
During its recent Q3 2024 earnings call on October 16, U.S. Bancorp (NYSE:USB) reported a net income of $1.71 billion, with a diluted EPS of $1.03, beating expectations of $0.99 per share. Net revenue stood at $6.9 billion, which included $4.17 billion of net interest income on a taxable-equivalent basis. ROTCE was 17.9% during the quarter. The bank maintained solid credit quality and reinforced its capital position with a CET1 capital ratio of 10.5%, up from 10.3% at the end of Q2.
In January, Barclays raised U.S. Bancorp (NYSE:USB)’s price target from $57 to $61, with an ‘overweight’ rating for the stock. Overall, the stock has a consensus Buy rating, based on a total of 20 analyst ratings, with an average share price upside potential of 13%. Hedge fund sentiment for USB has been improving as well. According to Insider Monkey’s database for Q3 2024, 46 hedge funds had investments in the company, up from 43 at the end of Q2.
8. The PNC Financial Services Group, Inc. (NYSE:PNC)
Number of Hedge Fund Holders: 51
The PNC Financial Services Group, Inc. (NYSE:PNC) is a diversified financial services corporation in the United States. It is the parent company of PNC Bank, one of the largest banks in the country with over 2,200 branches nationwide.
In November, the company announced plans to increase its branch investment by $500 million to open 100 new branches and renovate another 200 locations. This expansion to the plan laid out in February last year to invest approximately $1 billion in opening 100 new locations and renovating 1,200 others through 2028 is a significant step forward as The PNC Financial Services Group, Inc. (NYSE:PNC) strives to offer its clients convenient, in-person access to financial experts.
During its third-quarter 2024 earnings call on October 15, PNC reported total revenue of $5.4 billion, which grew by $21 million year-over-year, driven by higher net interest income and a surge in fee income growth. Net interest income was up 3% from last year to reach $3.4 billion, primarily due to higher yields on interest-earning assets. Fee income rose by 10% to $2 billion and was attributed to higher capital markets activity and an increase in residential mortgage servicing rights valuation. Net income for the quarter stood at $1.5 billion, with diluted EPS logged at $3.49.
Enhancing customer experience remains a top priority for The PNC Financial Services Group, Inc. (NYSE:PNC). During the quarter, it signed a bilateral data access agreement with Plaid to enable its customers to safely and securely share their financial data with selected financial applications via Plaid. PNC customers will be able to have greater data security through this partnership between PNC and Plaid.
The PNC Financial Services Group, Inc. (NYSE:PNC) is also committed to shareholder returns, and on January 3, it declared a quarterly cash dividend of $1.60 per share to be paid on February 5. Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of 5.55%. It is one of the best bank stocks to buy in 2025.
7. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 55
Morgan Stanley (NYSE:MS) is a global financial services company that provides a range of investment banking, securities, wealth management, and investment management services to corporations, financial institutions, governments, and individuals. As of January 13, 2025, it ranks 41st on the Fortune 500 list of the largest companies in the U.S. by revenue.
On October 16, the company announced financial results for the third quarter of fiscal 2024. The net revenue was recorded at $15.4 billion, up 16% from last year, driven by strong results across business segments. Morgan Stanley (NYSE:MS)’s net income stood at $3.2 billion, translating to a diluted EPS of $1.88, an improvement from $1.38 per diluted share a year ago. ROTCE for the quarter was 17.5%.
Net revenues at the Institutional Securities division grew 19% from last year to $6.8 billion, supported by the global reach of its Integrated Investment Bank and benefits of scale. The Wealth Management division delivered a record quarter, with net revenues increasing by 14% year-over-year to reach $7.3 billion. The Investment Management business also saw a 15% surge in revenue.
Total client assets across Wealth and Investment Management were measured at $7.6 trillion, with the firm on track to reach the $10 trillion mark. Morgan Stanley (NYSE:MS) also declared a dividend of $0.925 per share to be paid on November 15 and repurchased $0.8 billion worth of common stock as part of its Share Repurchase Program.
Wall Street analysts anticipate robust returns for Morgan Stanley (NYSE:MS) for the fourth quarter, as several large banks reportedly benefited after trading and dealmaking activity picked up following Donald Trump’s election win. It is one of the best bank stocks to buy in 2025, with 55 hedge funds having a stake in the company, according to Insider Monkey’s database for Q3 2024.
6. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 67
Capital One Financial Corporation (NYSE:COF) is an American bank holding company that owns the Capital One Bank. It provides a range of financial products and services to customers, businesses, and other clients through its digital channels, branch locations, and cafes. COF operates through three segments: Consumer Banking, Commercial Banking, and Credit Card. It is one of the best bank stocks to buy in 2025.
On February 19, 2024, the company announced that it had entered into a definitive agreement to acquire Discover, one of the largest card issuers in the U.S., for $35.3 billion. Under the terms, upon closure of the deal, Capital One Financial Corporation (NYSE:COF) would own 60%, while Discover’s shareholders would have a 40% stake in the combined company.
The move has bolstered investor optimism around the stock. Amalthea Fund stated the following regarding Capital One Financial Corporation (NYSE:COF) in its Q3 2024 investor letter:
US Credit cards have become a concentrated business. The leading players in order are Chase, a part of JPMorgan, American Express, Citi, Capital One, Bank of America, and Discover. A combination of Capital One and Discover will become the number two player.
Capital One Financial Corporation (NYSE:COF)’s financial position also remains solid. During its recent Q3 2024 earnings call on October 24, the company reported another strong quarter, driven by stable consumer credit results, high net interest income, and growth in its domestic card and auto businesses. Total revenue increased by 5% year-over-year to reach $10 billion. Net income for the quarter improved significantly sequentially as well, from $597 million in Q2 to $1.8 billion in Q3.
Considering its steady financial position and the impending acquisition of Discover, Wall Street analysts are bullish on the stock, with a consensus Buy rating. Hedge fund sentiment around Capital One Financial Corporation (NYSE:COF) is improving as well. According to Insider Monkey’s database for Q3 2024, 67 hedge funds held a stake in the company, up from 65 at the end of the second quarter.
5. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 72
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking and financial services firm. It offers a wide range of financial services to a diversified pool of clients. The company operates through the Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments.
On January 13, The Goldman Sachs Group, Inc. (NYSE:GS) announced the creation of Capital Solutions Group, a unit to help expand its business in private credit. The Group has been formed by combining solution activities within the company’s Global Banking & Markets segment. It will include the provision of investment banking services to private equity firms, finding investors who could offer capital for deals, and making loans tied to collateral to other lenders.
The company has taken several such steps over the last few years to bring leading market businesses and its investment banking franchise together to offer comprehensive strengths to its clients. This announcement is a continuation of the same practice and will offer The Goldman Sachs Group, Inc. (NYSE:GS)’s clients access to differentiated investment and sourcing opportunities in private credit, which is emerging as one of the hottest areas in Wall Street.
During its Q3 2024 earnings call on October 15, the firm reported net revenues of $12.7 billion, up 7% from last year. EPS was logged at $8.40, growing 54% year-over-year, and comfortably beating estimates of $6.89 per share. ROE for the quarter was 10.4%, while ROTE stood at 11.1%. Assets under supervision surpassed the $3 trillion mark; this was the 27th successive quarter of long-term net inflows.
The strong show reflected the strength of The Goldman Sachs Group, Inc. (NYSE:GS)’s top-notch, interconnected franchises in serving clients despite a challenging market environment. The company is also committed to giving back to shareholders, and returned $2 billion during the quarter, which included $978 million in dividends.
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the best bank stocks to buy in 2025. Wall Street analysts are bullish on the stock, with a consensus Buy rating.
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 72
Wells Fargo & Company (NYSE:WFC) is an American financial services company that owns the Wells Fargo Bank, which is considered among the ‘Big Four’ banks in the United States. It is one of the best bank stocks to buy in 2025.
The company also has a significant international presence, serving 68 million customers worldwide. It also boasts an extensive network of over 5,600 branches and around 11,000 ATMs that are open 24/7, providing it a competitive edge over most of its smaller competitors.
Wells Fargo & Company (NYSE:WFC) has been actively focusing on expanding its offerings. In September, it announced a multi-year cooperation agreement with the Volkswagen Group of America, under which WFC will be the preferred vehicle purchase financing provider for the Audi, Ducati, and Volkswagen brands in the United States. The new partnership is expected to commence in April 2025.
WFC has also partnered with Expedia to introduce two new co-branded credit cards, One Key and One Key+, that allow users to earn rewards for hotels, car rentals, flights, and more on Expedia, Hotels.com, and Vrbo. Moreover, these cards also feature handsome welcome bonuses worth between $300 and $400. New launches such as this have propelled Wells Fargo & Company (NYSE:WFC)’s customer reach. As of October 2024, the company had nearly 2 million new credit card accounts year-to-date.
The company had a stellar third quarter, reporting a net income of $5.1 billion, an ROE of 11.7%, and an ROTCE of 13.9%. All of these metrics improved sequentially from Q2. Moreover, this was the 13th straight quarter of credit card balance growth. WFC is also seeing a steady increase in its fee-based revenue, which had grown 16% during the first nine months of 2024.
Wall Street analysts are bullish on the stock heading into 2025, with a consensus Buy rating. Hedge fund sentiment also remains strong. According to Insider Monkey’s database for Q3 2024, 72 hedge funds had investments in the company.
3. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is an American multinational investment banking and financial services company, headquartered in New York City. It is the third-largest banking institution in the United States by assets and enjoys a vast global footprint with an on-the-ground presence in over 90 countries.
Over the past three years, the bank has seen its revenue record double-digit growth in the Middle East and Africa region, which was also the fastest growing cluster for Citigroup Inc. (NYSE:C) globally during this period. Despite economic and geopolitical headwinds, the company is seeing immense growth in the region on the back of strong FDI inflows.
In late November, the bank received approval from Saudi Arabia to establish its regional headquarters in the bustling capital city of Riyadh. This marks a significant step for the company in its bid to further solidify its position in the region. Citigroup Inc. (NYSE:C)’s share price has grown by 5% since the announcement.
The bank has also been undergoing strategic repositioning. As part of these efforts, in December, it successfully separated its institutional banking business from its consumer, small, and middle market entities in Mexico. The separation is an important milestone in Citigroup Inc. (NYSE:C)’s quest to simplify the firm and have a bank that is more focused on its core offerings.
Citigroup’s financial position remains robust. During the third quarter of 2024, the company experienced revenue growth and positive operating leverage across all its businesses. Revenue grew 3% during the quarter, ex-divestitures. Net income was reported at $3.2 billion, down from $3.5 billion during the same period last year, due to higher cost of credit. Despite that, the bank beat earnings estimates by 20 cents.
Citigroup Inc. (NYSE:C) is one of the best bank stocks to buy in 2025, based on hedge fund sentiment. According to Insider Monkey’s database for Q3 2024, 88 hedge funds had investments in the company, up from 85 at the end of Q2. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 9%.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 98
Bank of America Corporation (NYSE:BAC) is a bank and financial holding company that serves individuals, companies, and institutions through its eight lines of business. The bank has an extensive network of branches and also enjoys a robust digital presence, which has allowed it to attract customers, expand its deposit base, and effectively manage costs to maintain profitability.
The company enjoys a healthy balance when it comes to the contribution of its segments towards the overall performance. A little over half of its earnings come from the Consumer Banking and Global Wealth & Investment Management (GWIM) businesses, which are focused on serving the people. The other half comes from Global Banking and Markets businesses, which are dedicated toward companies and institutional investors.
Bank of America Corporation (NYSE:BAC)’s recent financial success has been attributed to its Consumer Banking segment, which continues to deliver solid organic growth. For the last 23 successive quarters, the bank has been adding net new consumer checking accounts, which is helping in expanding BAC’s market share. During the first nine months of 2024, the bank added more than 880,000 net new checking accounts.
Investment balances for consumer clients in Q3 climbed 28% year-over-year, to a record $497 billion, driven by strong inflows of $29 billion over the past 12 months. The company’s overall outlook for the backend of 2024 and the start of 2025 appeared encouraging to investors and this was reflected in Diamond Hill Large Cap Strategy’s remarks in its Q2 2024 investor letter:
Other top contributors in Q2 included Bank of America Corporation (NYSE:BAC) and Extra Space Storage. Shares of financial services company Bank of America rose in the quarter as it looks increasingly likely net interest income will inflect and begin growing again in 2024’s back half and into 2025.
According to Insider Monkey’s database for Q3 2024, 98 hedge funds held a stake in the company, up from 92 at the end of Q2. Wall Street analysts are bullish on the stock heading in 2025, with a consensus Buy rating and an average share price upside potential of 3%. As a result, the stock ranks second in our list of the best bank stocks to buy in 2025.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is an American financial services company, headquartered in New York City that provides a range of investment banking and asset management solutions for a diverse client base. For the past four years, it has been the largest bank in the U.S. for retail deposits.
On January 15, the company reported results for the fourth quarter of 2024. It topped estimates for both revenue and profit, driven by better-than-expected net interest income and strong investment banking results. Profit soared by 50% from last year to reach $14 billion, helped by a 7% drop in non-interest expenses.
Profit for the full year 2024 stood at $58.5 billion, which was a record annual profit for the company. Analysts have credited the strong results to an improving economy and a revival in the banking industry as deal-making activities surge amid a decline in interest rates. Looking ahead, JPMorgan Chase & Co. (NYSE:JPM) expects a boost in net interest income, anticipating a figure of $94 billion for 2025, against analysts forecasts of $91 billion.
The company is also a generous dividend payer. During the quarter, it distributed a common dividend of $3.5 billion or $1.25 per share. JPMorgan Chase & Co. (NYSE:JPM) was recently ranked first by Insider Monkey in its list of the Top 20 Dividend Stocks of 2024. Analysts expect the bank to continue sustaining strong shareholder returns given its robust financial performance.
Wall Street analysts are bullish on the stock with a consensus Buy rating. According to Insider Monkey’s database for Q3 2024, 105 hedge funds held a stake in the company.
Overall, JPM ranks first among the 10 Best Bank Stocks to Buy in 2025. While we acknowledge the potential of banking companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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