In this piece, we will take a look at the 10 Best European Bank Stocks to Buy According to Analysts.
Strong earnings, record shareholder returns and resilience amid falling interest rates were the catalysts behind European bank stocks delivering their best year in over a decade. On average, the stocks were up by more than 32% as they benefited from a high interest rate environment as the European central bank sought to keep inflation in check in 2024.
Due to their emphasis on fee-based income and wealth management services, major European banks have managed to stay profitable. Additionally, Eurozone banks came into 2024 with stronger balance sheets, lower non-performing loan ratios, and larger capital buffers thanks to strict regulatory reforms put in place following the 2008 financial crisis.
Interest rate cuts as the year came to a close did little to dent investor sentiments on the European bank’s outlook, as depicted by the Euro Stoxx Bank index rising to its highest level since 2010. While loan growth slowed due to the high interest rate environment, effective risk management did more than enough to offset the losses.
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The Stoxx 600 Europe Banks Index is predicted to see average price returns of over 8% in 2025, continuing the upward trend. Analysts claim that more value may be unlocked and that European banking stocks are still inexpensive when compared to their US counterparts. A favourable outlook for banking stocks is making now a good time for European governments and buyout companies to sell their holdings.
“We expect the unwind of public stakes at some European listed banks to continue at an uneven pace this year,” said Roberto Scholes, head of strategy at wealth manager Singular Bank. The moves would ” positively impact share prices as potential public interference dissipates.”
Likewise, President Donald Trump’s winning the hotly contested election is emerging as another factor that could continue pushing European bank stocks higher in 2025. That’s in part because the new administration has affirmed its commitment to deregulation tax cuts and fiscal stimulus expected to fuel deals and activities in the sector.
Deregulation is expected to spur banking deals in 2025 after topping highs of $41.5 billion in 2024. “We would expect 2025 to be another strong year for M&A as management teams have surplus cash burning a hole in their pockets and buybacks are becoming less accretive,” said Nick Brand, a fund manager at Polar Capital Global Financial Trust.
Similarly, investors have been drawn to Europe’s beat-down valuations across industries, with stock prices in the region trading at a record 40% discount to their US counterparts based on forward earnings multiples. There are indications that European M&A may continue to pick up in 2025 as buyout companies seek to deploy record quantities of unspent capital.
While there have been fears that banks would come under pressure as central banks in the region cut the benchmark interest rates, the sector appears to be more than prepared. A lower interest rate environment is expected to fuel deal-making expected to maintain the positive earnings momentum. Similarly, European bank balance sheets are more than equipped for the test. According to Bloomberg Intelligence, the sector median CET1 ratio, which measures capital levels, is at the highest level it has ever been since 2011, at 14.9%.
“Now that balance sheets are stronger and the product factories have been strengthened, European banks are now reconsidering larger deals,” JPMorgan Chase & Co. analyst Kian Abouhossein wrote in a note. “This renewed focus is positive for banks with discounted valuations that could become targets.” Stronger balance sheets and improved capital buffers are some of the factors that should allow the best European bank stocks to continue outperforming amid falling interest rates in 2025.
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Our Methodology
To compile our list of the 10 best European bank stocks to buy according to analysts, we first made a list of all European banks and asset managers that trade on the NASDAQ and NYSE stock exchanges using stock screeners. We examined the banks, focusing on why they stand out as long-term investment plays. Finally, they were ranked based on Wall Street analysts’ upside potential.
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10 Best European Bank Stocks to Buy According to Analysts
10. HSBC Holdings plc (NYSE:HSBC)
Number of Hedge Fund Holders: 14
Stock Upside Potential as of January 24: 1.15%
HSBC Holdings plc (NYSE:HSBC) provides banking and financial services through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. It stands out as one of the best European banks to buy owing to its track record in returning value through buybacks and dividends. The bank has returned over $34 billion to shareholders over the past two years.
After announcing a 9.9% surge in third-quarter profit to $8.48 billion, HSBC Holdings plc (NYSE:HSBC) confirmed a $3 billion share repurchase program. The buyback program aligns with the bank’s long-term plan to deliver enhanced shareholder value while maintaining a solid capital structure. The $3 billion buyback program comes from the bank, delivering solid financial results characterized by revenue growth and solid performance in the wealth and wholesale transaction units.
In 2025, HSBC Holdings plc (NYSE:HSBC) also intends to simplify its geographic governance and restructure its organization into four business lines. Additionally, the business has reaffirmed its goal of a return on tangible equity in the mid-teens. These latest events demonstrate HSBC’s dedication to expansion and reorganization.
As of January 24th, HSBC had an upside potential of 1.15%. Despite the modest average upside, the highest target suggests significant growth. The stock is rated as a Strong Buy by several analysts. Over the past year, 5 Wall Street analysts have rated HSBC, resulting in a consensus “Buy” rating: 1 hold, 3 buys, and 1 strong buy.
9. Lloyds Banking Group plc (NYSE:LYG)
Number of Hedge Fund Holders: 10
Stock Upside Potential as of January 24: 7%
Lloyds Banking Group plc (NYSE:LYG) provides a range of banking and financial services. It operates in three segments: retail, commercial banking, insurance, pensions, and investments. While Lloyds underperformed the overall banking sector in 2024, rallying by just 14%, it remains one of the best European bank stocks to buy, according to analysts.
The underperformance was mostly attributed to the company setting aside £450 million to cover potential refunds and penalties owing to its exposure to the mis-selling scandal facing car finance providers. Amid the scandal, Lloyds Banking Group plc (NYSE:LYG) continues to fire on all angles, going by solid third-quarter results on which pretax profits surged to £1.8 billion, beating analyst estimates of £1.6 billion.
Lloyds gains from higher net interest margins since the Bank of England is anticipated to keep interest rates higher throughout 2025 to fight inflation. Barclays analysts predict that if interest rates stay above 5% for the majority of the year, the bank’s profits could increase by an extra 5%.
Lloyds Banking Group plc (NYSE:LYG) is still making significant investments in digital banking projects to improve customer satisfaction and cut expenses. By the second half of 2025, these investments, according to JP Morgan analysts, could greatly raise the bank’s efficiency ratios, acting as a medium-term share price catalyst.
8. UBS Group AG (NYSE:UBS)
Number of Hedge Fund Holders: 25
Stock Upside Potential as of January 24: 7%
UBS Group AG (NYSE:UBS) provides financial advice and solutions to private, institutional, and corporate clients worldwide. It also offers investment advice, estate and wealth planning, investing, corporate and banking. The Swiss financial services juggernaut increased by about 18% in 2024 due to strategic business moves, cost management efforts, and a favorable banking environment.
Its edge as one of the best European bank stocks to buy stems from its operational strength and strategic focus. UBS Group AG (NYSE:UBS) achieved a 28.1% revenue growth last year, affirming its focus on faster capital growth. The increase is attributed to the strength of the company’s investment banking capabilities and asset management services.
Profit before tax reached highs of $7.1 billion in the turgid quarter at the back of a 9% increase in revenue as invested assets rose by 15% to $6.2 trillion. UBS Group AG (NYSE:UBS) can boost earnings growth through accelerated cost savings. The company may enhance its overall financial performance and profit margins by putting more emphasis on operational efficiency. The growth should come as UBS Group invests in technological tools to improve its service delivery and customer experience. It’s been investing in Microsoft’s Copilot and its AI assistant, Red.
As of January 24th, UBS Group AG (NYSE:UBS) had a 5.12% upside potential. While the average upside is modest, the highest target indicates significant growth. The stock is rated as a Strong Buy by multiple analysts. Over the past year, 9 Wall Street analysts have rated UBS, resulting in a consensus “Buy” rating: 3 holds and 6 buys.
7. NatWest Group plc (NYSE:NWG)
Number of Hedge Fund Holders: 15
Stock Upside Potential as of January 24: 10.75%
NatWest Group plc (NYSE:NWG) provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. The financial services stock has been in fine form, rallying by more than 90% over the past year to its highest level in nearly a decade. The rally comes against the backdrop of several key factors, including the bank’s robust net interest.
Amid the high interest rate environment, NatWest Group plc (NYSE:NWG) has strengthened its lending unit, bolstering its financial outlook. Likewise, analysts remain optimistic about its long-term prospects based on strategic initiatives in the commercial sector. NatWest’s recent foray into new business sectors is another factor contributing to its strong market performance. The bank has increased its market share and broadened its sources of income through the acquisition of Sainsbury’s Bank and a piece of Metro Bank’s residential mortgage portfolio. The bank’s longer-term growth trajectory has been viewed as being dependent on these acquisitions.
Increasing investor confidence has also been greatly aided by the UK government’s ongoing reduction of its ownership in NatWest Group plc (NYSE:NWG). NatWest’s return to fully private ownership is indicated by the decrease in government ownership, which analysts predict will improve the company’s performance in the future.
6. Deutsche Bank Aktiengesellschaft (NYSE:DB)
Number of Hedge Fund Holders: 12
Stock Upside Potential as of January 24: 13.34%
Deutsche Bank Aktiengesellschaft (NYSE:DB) is a German financial services company that offers corporate, investment banking, and asset management products and services. The bank has succeeded amid an aggressive restructuring drive that entailed downscaling fixed-income businesses and cutting staff. Consequently, the stock was up by 49% in 2024.
Last year, the Frankfurt-based bank laid off 111 senior managers in its retail and private wealth unit as part of a cost-saving drive. The cut came as the bank sought to reduce its cost-to-income ratio from 80% to 60%. In addition to pursuing cost cuts, it is also seeking to grow its retail unit and wealth management arm. Management is optimistic about reaching 2025 growth targets due to steady revenue growth, capital strength, and cost reductions.
After generating losses between 2005 and 2019, the bank has become profitable, with its profit expected to exceed the €9 billion mark in 2025 and 2026. The robust growth and turnaround are attributed to Deutsche Bank Aktiengesellschaft (NYSE:DB) strengthened capacity and ability to manage loan losses. The bank’s transition from a losing phase to a projected profit of a sizable amount suggests a noteworthy restructuring success. Analysts and investors alike have taken notice of Deutsche Bank’s capacity to withstand possible financial shocks while maintaining its profit base growth.
5. Barclays PLC (NYSE:BCS)
Number of Hedge Fund Holders: 21
Stock Upside Potential as of January 24: 13.76%
Barclays PLC (NYSE:BCS) provides various financial services, including retail banking, credit cards, wholesale banking, investment banking, wealth management, and investment management services. It was one of the best-performing bank stocks in Europe after rallying by 70% in 2024. The rally came on the bank embarking on a restructuring drive that entailed stabilizing operations and improving profitability.
Likewise, Barclays PLC (NYSE:BCS) enhanced its focus on the domestic lending business in the UK, which includes mortgage lending and personal loans, therefore enjoying greater stability. It also reduced its operating costs in the volatile investment banking segment. The acquisition of Tesco Bank all but strengthened the bank’s retail banking segment, consequently bolstering growth metrics.
The restructuring drive and investment catalyzed Barclays PLC (NYSE:BCS) to deliver solid third-quarter results. Net profits rose to £1.6 billion, and revenues rose 5% yearly to £6.5 billion. The company’s investment banking division, which has significant exposure to the US market, did well in terms of growth. The growth was driven by increased stock market volatility and renewed deal-making activity, which increased fee revenues. Additionally, the bank’s net interest income is exceeding expectations.
4. ING Groep N.V. (NYSE:ING)
Number of Hedge Fund Holders: 14
Stock Upside Potential as of January 24: 14.84%
ING Groep N.V. (NYSE:ING) provides various banking products and services while operating through five segments: Retail Netherlands, Retail Belgium, Retail Germany, Retail Other, and Wholesale Banking. Its competitive edge as one of the best European bank stocks to buy stems from its ability to maintain resilient net interest income and achieve double-digit fee income growth.
Despite the bank’s third-quarter results of 2024 missing expectations, ING Groep N.V. (NYSE:ING) continued to see growth in lending and deposits. Consequently, it remains in a solid position to deliver significant revenue growth in 2025. That explains why the bank lifted its annual total income outlook for the second quarter to more than €22.5 billion from €22 billion expected.
Alongside the bank’s strategic focus on maximizing capital usage in wholesale banking and mortgage lending, it has also demonstrated strong growth across all its markets. Additionally, it has made significant strides in reducing share capital by repurchasing 5.5 million shares as part of the €2 billion share buyback program. The initiative highlights ING Groep N.V.’s (NYSE:ING) calculated attempts to maximize capital allocation and raise shareholder value.
3. Banco Santander, S.A. (NYSE:SAN)
Number of Hedge Fund Holders: 15
Stock Upside Potential as of January 24: 19.01%
Banco Santander, S.A. (NYSE:SAN) is one of the largest banks in Spain, specializing in providing various financial services, including time deposits, mutual funds, and current and savings accounts mortgages. It is one of the best European bank stocks to buy as it is reaping the rewards of digitization in a bid to enhance customer experience. It’s also benefiting from improved automation, making banking simpler and accessible to the masses.
Likewise, it logged solid third-quarter results characterized by a 2% growth in profit to €3.3 billion. The increase came as Banco Santander, S.A. (NYSE:SAN) continued to expand its customer base, adding 5 million new customers last year. In addition, it is benefiting from an aggressive expansion plan that has seen it strengthen its prospects in Europe and the US.
With a 41% year-over-year increase in revenue in the United States, the company’s Corporate & Investment Banking (CIB) segment is expanding. All things considered, Banco Santander, S.A. (NYSE:SAN) is growing its clientele and operations in every area. Backed by a solid balance sheet, Banco Santander continues to return value to shareholders by its 4.47% dividend yield.
2. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Number of Hedge Fund Holders: 12
Stock Upside Potential as of January 24: 21.32%
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is a financial services company that provides retail banking, wholesale banking, and asset management services. It offers savings accounts, demand deposits, time deposits, and loan products. It is one of the best European bank stocks owing to its dominant position in Spain, which is characterized by sustainable revenue streams and strong pricing power.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) has moved to strengthen its long-term prospects with a proposed deal to acquire Sabadell for $12.19 billion. The acquisitions, once complete, should strengthen the bank’s market presence and financial performance. CEO Onur Genc said BBVA is well-positioned for stable long-term growth and effective risk management in 2025. The bank is also positioned for robust lending growth in Mexico amid improvements in Turkey’s cost of risk.
In the third quarter, Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) announced a 26% year-over-year increase in attributable profit that reached €2.627 billion. Earnings per share also rose 32% to €0.44. The better-than-expected financial results were the catalyst behind the bank announcing a €0.29 dividend, representing an 81% increase. The stock rewards income-focused investors with a 6.69% dividend yield.
1. BNP Paribas SA (NYSE:BNPQY)
Number of Hedge Fund Holders: N/A
Stock Upside Potential as of January 24: 23.71%
BNP Paribas SA (NYSE:BNPQY) is a financial services company that provides financial products and services. It offers capital markets, securities, investment banking, financing, risk management, cash management, and financial advisory services. It is one of the best European bank stocks to buy, according to analysts, going by impressive growth rates in its investment banking unit.
Investment banking has emerged as a soft spot, helping offset losses in the lending business that headwinds have plagued in recent months. For instance, revenues in the equities trading segment rose by 13% in Q3 of 2024 as fixed income gained 12%, which was helped by BNP Paribas SA (NYSE:BNPQY) investing more funds in equities trading.
In addition, BNP Paribas has sought to strengthen its growth prospects by pursuing growth through acquisitions. Last year, it acquired AXA SA’s asset management unit and created one of Europe’s largest money managers as it continues to strengthen its investment banking segment. Wealth management is another segment that continues to drive growth following the acquisition of HSBC’s private banking operations in Germany. Income from asset management was up 7.9% in the third quarter. Amid the underlying growth, BNP Paribas SA (NYSE:BNPQY) expects its profit to rise to more than €11.2 billion.
While we acknowledge the potential of BNP Paribas SA (NYSE:BNPQY) as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than BNPQY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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