In this article, we discuss the 12 best-performing bank stocks in 2024. If you want to skip our detailed discussion on the banking industry, head directly to 5 Best-Performing Bank Stocks In 2024.
The banking industry faces challenges in 2024 due to a slowing global economy, diverse economic conditions, and risks such as supply chain disruptions, geopolitical tensions, and extreme weather events. Global inflation is projected to drop to 5.2% in 2024 from the 2022 high of 8.7%, with central banks adjusting monetary policies. The United States is expected to maintain an elevated federal funds rate, while the European Central Bank and other central banks plan rate adjustments. However, global money supply is contracting, with the US experiencing its fastest decline since the 1930s.
Higher interest rates have benefited the banking industry, with significant increases in net interest income reported by American and Canadian banks in 2022, as per a latest Deloitte report. However, the continuation of elevated rates is expected to increase funding costs and squeeze margins for banks globally. The current rate cycles have notably raised the cost of interest-bearing deposits for US banks, especially impacting regional and midsize banks. The global banking industry may struggle to reduce high deposit costs even as interest rates decline due to customer expectations and increased market competition. The situation will vary regionally, with European banks potentially reducing deposit costs more rapidly. Moreover, loan growth is expected to be modest, given macroeconomic conditions and high borrowing costs. Banks are likely to maintain restrictive credit lending policies, tightening credit standards across product categories. While consumer spending remains robust, demand for credit card and auto loans is expected to stay strong. However, bank loan demand from firms has decreased significantly, with potential weakness in corporate loans in the short term. Climate change considerations are expected to impact loan demand and credit availability, with banks foreseeing credit tightening due to climate risks on loans to "brown" firms.
Deloitte expects bank profitability in 2024 to be tested due to higher funding costs and sluggish revenue growth. Banks with diversified revenue streams and strong cost discipline are likely to boost profitability and market valuation. The global banking landscape is undergoing fundamental shifts, with Chinese and American banks dominating global rankings. Over the next decade, more banks from India and the Middle East are expected to join the top ranks, tilting the balance toward Asia and the Middle East. Indian banks are anticipated to grow their balance sheets, while sovereign wealth funds in the Middle East may exert strong influence on global money flows.
According to S&P Global, global banks remain steady, with 79% of bank rating outlooks reported as stable as of October 31, 2023. This resilience is attributed to robust capitalization, improved profitability, and maintained asset quality. However, challenges arise from a weak economic outlook, impacting business volumes, asset quality, and financing conditions for banks. On a positive note, most banks' earnings will continue to benefit from high interest rates. Key risks include the potential for a significant economic downturn in Europe, the US, and China, along with persistent high inflation. Additionally, geopolitical events such as the Russia-Ukraine and Israel-Hamas conflicts pose spillover risks.
The failure of Silicon Valley Bank in March 2023 led to concerns about unrealized losses on banks' debt holdings, with bond price declines in October 2023, as per a recent issue of S&P Global Market Intelligence. While unrealized losses outside the US didn't cause financial stress comparable to the US in early 2023, they affected monetary policy by influencing banks to be cautious in extending credit and enforcing tighter lending standards. As monetary policy shifts towards an easing phase in 2024, bond price recovery over the next 12 months is expected to reduce these losses, benefiting banks in Latin America, emerging Europe, and other developing economies. Unrealized losses for eurozone banks may persist until at least the second half of the year due to later monetary policy pivots. M&A activity in emerging markets has been stalled since the pandemic, but improved profitability and financial sector resilience may encourage larger banks to resume cross-border expansion. Smaller and weaker banks, facing higher funding costs, increased competition, technological lag, and higher taxes, are likely candidates for consolidation, especially in emerging Europe and potentially in Sub-Saharan Africa with numerous small banks in their banking sectors.
In the dynamic banking landscape, some of the top bank stocks include JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC). However, in this article, we discuss the best-performing bank stocks in 2024.
Our Methodology
We used a stock screener and selected the best-performing bank stocks in 2024 based on year-to-date share price performance as of February 10. We have assessed the hedge fund sentiment toward each stock from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the third quarter of 2023. The stocks are ranked in the ascending order of the share price performance.
Citigroup Inc. (NYSE:C) is a global financial services holding company that operates in North America, Latin America, Asia, Europe, the Middle East, and Africa. It has three main segments – Institutional Clients Group, Personal Banking and Wealth Management, and Legacy Franchises. On January 12, Citigroup Inc. (NYSE:C) declared a $0.53 per share quarterly dividend, in line with previous. The dividend is payable on February 23, to shareholders of record on February 5.
According to Insider Monkey’s third quarter database, 79 hedge funds were bullish on Citigroup Inc. (NYSE:C), compared to 75 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 55.2 million shares worth $2.27 billion.
Like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C) is one of the best bank stocks to invest in.
Patient Capital Management stated the following regarding Citigroup Inc. (NYSE:C) in its fourth quarter 2023 investor letter:
“Citigroup Inc. (NYSE:C), run by Jane Fraser since 2021, is on a multi-year journey to reorganize the business and reach return on tangible common equity of 11-12% by 2025-2026 (and higher further out). Citigroup is finally taking the hard actions necessary, cutting unprofitable departments, taking out middle management layers, and reducing overall headcount. We have high confidence Citi will hit its targets.”
11. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG)
Number of Hedge Fund Holders: 14
Share Price Performance as of February 10: 5.37%
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) offers a range of financial services, including banking, leasing, securities, credit cards, and consumer finance. The company operates through different business units, including Wholesale, Retail, Global, and Global Markets. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) is one of the best-performing bank stocks in 2024.
In the Greed & Fear report released on February 2, investment advisory firm Jefferies updated its long-only equity portfolio for Japan, which included Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG).
According to Insider Monkey’s third quarter database, 14 hedge funds held stakes in Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG), same as the prior quarter. Ramius is the leading stakeholder of the company, with 4.15 million shares worth $41 million.
Mizuho Financial Group, Inc. (NYSE:MFG) is a financial services company based in Tokyo, Japan, with operations globally. Its business segments include Retail & Business Banking, Corporate & Institutional, Global Corporate, Global Markets, Asset Management, and Others. Mizuho Financial Group, Inc. (NYSE:MFG) is one of the best-performing stocks in the banking sector.
On January 30, Mizuho Americas announced that it is investing in DirectBooks, a primary markets communications platform. DirectBooks aims to enhance capital markets efficiency through organized deal data and streamlined communication. Mizuho Americas is the first non-consortium bank to join the platform, which has expanded to include over 34 banks and 500 institutional investors.
According to Insider Monkey’s third quarter database, 9 hedge funds were bullish on Mizuho Financial Group, Inc. (NYSE:MFG), compared to 8 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group is the leading stakeholder of the company, with 312,380 shares worth over $1 million.
Shinhan Financial Group Co., Ltd. (NYSE:SHG) is a South Korean financial services provider operating globally. The company has six segments – Banking, Credit Card, Securities, Life Insurance, Credit, and Others. On January 16, Bank of America analyst Jeehoon Park upgraded Shinhan Financial Group Co., Ltd. (NYSE:SHG) shares from Neutral to Buy. The upgrade is based on the expectation that Korean banks, particularly large ones like Shinhan, will experience increased investor interest amid a recovery in export growth. Park anticipates that a boost in exports will lead to a manufacturing recovery, fostering stronger economic growth, and benefiting the banking sector through expanded loan books, improved margins, and lower credit costs.
According to Insider Monkey’s third quarter database, 12 hedge funds were long Shinhan Financial Group Co., Ltd. (NYSE:SHG), compared to 6 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 859,297 shares worth $22.7 million.
Intercorp Financial Services Inc. (NYSE:IFS) is a financial services provider in Peru, offering banking, insurance, wealth management, and payment services to both retail and commercial clients. Intercorp Financial Services Inc. (NYSE:IFS) is one of the top performing bank stocks in 2024. On November 9, 2023, the company reported Q3 GAAP earnings per share of S/1.69 and a net interest and similar income of S/1.17 billion, up 7.7% on a year-over-year basis.
According to Insider Monkey’s third quarter database, 4 hedge funds were bullish on Intercorp Financial Services Inc. (NYSE:IFS), compared to 7 funds in the prior quarter. Rob Citrone’s Discovery Capital Management is the leading stakeholder of the company, with 221,869 shares valued at $5 million.
7. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Number of Hedge Fund Holders: 7
Share Price Performance as of February 10: 8.89%
Next on our list of the best-performing bank stocks is Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA), a financial institution providing retail and wholesale banking, along with asset management services. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) was founded in 1857 and is headquartered in Bilbao, Spain. On January 30, the company reported a non-GAAP EPS of €1.32 and a revenue of €29.54 billion for fiscal year 2023. Revenue for the year increased 19.4% on a year-over-year basis.
According to Insider Monkey’s third quarter database, 7 hedge funds were bullish on Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA), compared to 8 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 56 million shares valued at $450.8 million.
ClearBridge International Value Strategy made the following comment about Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) in its Q4 2022 investor letter:
“Stock selection in the financial sector was the primary contributor to relative outperformance and included two of the Strategy’s top five individual performers. Financials benefited from interest rate hikes by major central banks, particularly in Europe as the ECB indicated it would maintain a hawkish approach. Combined with investors becoming less bearish on the European economy, these tailwinds helped to propel our holdings in the sector. For example, Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) (also known as BBVA), a Spanish multinational financial services company, was the individual performer during the quarter. The company continues to improve revenues from strong loan growth and increasing credit spreads. Additionally, its strong brand presence in Mexico has helped drive earnings growth through its profitable deposit mix and growing market share in financial transactions.”
6. Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG)
Number of Hedge Fund Holders: 12
Share Price Performance as of February 10: 9.18%
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) is a bank holding company overseeing MUFG Bank, offering diverse financial services globally. Its operations include retail and commercial banking, corporate and investment banking, asset management, and global markets.
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) announced on November 14 that it plans to repurchase up to 400 million shares of its stock, equivalent to ￥400 billion. The decision follows a more than fourfold increase in its six-month profit. Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) stated that the stock repurchase is a flexible measure aimed at returning profits to shareholders and enhancing capital efficiency.
According to Insider Monkey’s third quarter database, 12 hedge funds were long Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), compared to 13 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company, with 818,279 shares worth $7 million.
While investors usually flock to bank stocks like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC), ranking 6th on our list of the best-performing bank stocks in 2024 is Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG).
ClearBridge International Value Strategy made the following comment about Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) in its Q4 2022 investor letter:
“We also initiated a position in Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), a Japanese financial company that provides retail and commercial banking, investment banking, capital markets, and asset management services globally. We believe the Bank of Japan’s Yield Curve Control policies have proved a major headwind to Japanese banking earnings since first introduced in 2016. However, as Japan finds itself facing the same rising inflationary pressures that have forced most other global central banks to embark on a path of interest rate normalization, we believe the Bank of Japan is likely to follow suit. This should help remove the headwinds that have weighed on Mitsubishi UFJ’s net interest income for the last six years and help to spur greater increases in income, margins, and profitability.”