Best Bank Stocks to Buy Right Now: Top Picks to Invest

2025.10.23 2025.10.23
Best Bank Stocks to Buy Right Now: Expert Analysis

Oleg Tkachenkohttps://www.litefinance.org/blog/authors/oleg-tkachenko/

Bank stocks are often used to diversify investment portfolios and allocate money when the economy recovers. However, due to high volatility, only a few of them can be considered the best bank equities to buy for long-term investors.

This article explores cases in which even the shares of the most reliable institutions lost 5–7 times their value and highlights the best-performing bank shares that remained resilient during financial crises. If you are wondering which bank stocks to buy, this overview will help you identify those to invest in based on a bank’s stable revenue and strong financial metrics.

Major Takeaways

• Bank stocks are known for their volatility and cyclical nature, closely tied to the overall economy. A five-year gain doesn’t mean there weren’t weeks of deep drawdowns during the cycle. Therefore, they should be treated as a speculative asset or as part of a buy-the-dip strategy.
• Systemically important financial institutions will more likely receive government support during recessions. However, the 2008 crisis proved that even major banking giants could collapse despite strict regulations.
• Shares of many European regional banks suffered severely after 2008. Typically, bank stock performance recovers within 2–3 years, creating a good opportunity to buy.
• The top banking sector stocks for investors are those that demonstrated the ability to stay strong during the 2008 and 2020 downturns and continue to break above their historical highs — such as Goldman Sachs Group Inc (GS), JPMorgan Chase (JPM), and Royal Bank of Canada (RY).

How to Analyze Bank Stocks to Invest

Key steps of fundamental bank stock analysis:

• Analyze the key financial metrics, including financial statements and ratios such as EBITDA, P/E, return on equity, and loan loss reserves. Pay attention to positive trends that exceed forecasts.
• Evaluate macroeconomic indicators like unemployment, inflation, and the interest rate environment.
• Examine how the stock performed during major crises of recent decades, such as the dot-com bubble (2000), the mortgage crisis (2008), and the pandemic (2020). Priority should be given to blue-chip stocks. Compare the depth of drawdowns and the speed of recovery with other stocks.

The chart above shows Citigroup’s share price, one of the biggest US banks. It demonstrates how risky it can be to invest even in the most reliable banks, as their shares can still collapse at any moment.

Best Performing Bank Stocks to Buy Right Now

Since 2024, the US Federal Reserve has been signaling a gradual fed interest rate cut. This policy makes loans more affordable and supports the financial sector. In the EU, banks have been slowly recovering after the pandemic, showing stable growth. As a result, European bank shares have become more attractive.

Key criteria for selecting the best bank stocks to buy now include:

• Maximum one-year performance. Five-year stock performance is also important, though less relevant for short- and medium-term investing.
• Stocks fell during the pandemic, reached major support levels, and have been steadily recovering over the past two years.
• Most of them are systemically important institutions.

Top-performing banking sector stocks for short- and medium-term investors:

BBVA (BBVA)

Country: Spain.

Capitalization: €94.26 billion.

5-year return: +589.22%, 1-year return: +71.94% (as of October 5, 2025).

Annual dividend yield: 4.26%, or €0.68 per share.

BBVA is a Spanish international financial group and one of the largest commercial banking institutions in the world, offering banking, insurance, and investment services. It operates in more than 30 countries, including major markets such as Mexico.

In the aftermath of the 2008 crisis, BBVA shares fell to historic lows. Some analysts believe it may now be too late to buy, as the stock price is approaching its 2007 peak. However, the company’s financial metrics and the outlook for the entire financial sector remain positive. It is reasonable to assume that the growth may continue for at least another year.

UniCredit (UCG)

Country: Italy.

Capitalization: €99.30 billion.

5-year return: +818.56%, 1-year return: +64.45% (as of October 5, 2025).

Annual dividend yield: 3.76%, or €2.40 per share.

The second-largest investment banking group in Italy by market capitalization also operates in Germany, Austria, and several Central and Eastern European countries. The bank serves millions of clients, offering financial products and solutions across retail, corporate, and small business sectors.

In 2007, UniCredit shares reached an all-time high of slightly above €200, but the 2008 crisis hit the company hard — the stock lost nearly ten times its value in a single year. Since 2023, a steady recovery trend has emerged. With the price still far below previous highs, the stock has room to rise, supported by strong financial metrics and improving bank stock valuation.

UBS (UBSG)

Country: Switzerland.

Market capitalization: CHF 103.84 billion

5-year return: +207.90%, 1-year return: +21.49% (as of October 5, 2025).

Annual dividend yield: 2.25%, or CHF 0.72 per share.

UBS is one of the world’s leading wealth management institutions, founded in 1912. In 2024, the bank completed its acquisition of Credit Suisse — the biggest merger in the financial sector since the 2008 financial crisis. UBS has shown strong bank earnings, demonstrating steady recovery and proving its place among the best-performing bank shares in Europe.

Best Bank Stocks for Long-Term Investment Strategy

For a long-term investment portfolio, the best bank stocks are selected based on the following criteria:

• Maximum return over both one-year and five-year periods. Consistent positive performance over the long term, indicating a sustained upward trend.
• Systemically important institutions in their regions that operate across several countries.
• Regular setting of new historical highs, confirming strong stock performance. A generally upward trend sustained over the past 25 years. For example, Italy’s biggest financial group, Intesa Sanpaolo, is not among the selected equities as its volatility makes it unsuitable for long-term stability.

Best bank stocks to invest in for long-term investors include:

Morgan Stanley (MS) and JPMorgan Chase (JPM) show similar results, so this review focuses only on JPM. However, both banks are worth considering in the long term. For those interested in more diverse markets, regional commercial banks such as DBS Group (Singapore), ICICI Bank (India), and Erste Group (Austria) may also be appealing options.

Goldman Sachs Group Inc (GS)

Country: USA.

Capitalization: $239.14 billion

5-year return: +295.19%, 1-year return: +59.54% (as of October 5, 2025).

Annual dividend yield: 2.03%, or $16.04 per share.

Goldman Sachs, founded in 1869, is one of the world’s biggest investment banking and financial conglomerates. The company provides financial and advisory services to corporations, governments, financial institutions, and private clients worldwide. It has been part of the Dow Jones index since 2013.

Unlike many of Europe’s biggest banks and some US institutions, Goldman Sachs weathered the 2008 market downturn relatively smoothly. The business also remained stable during the pandemic. Temporary corrections have been shallow, and the price continues to reach new record highs, confirming its position among the top banking sector stocks.

JPMorgan Chase (JPM)

Country: USA.

Capitalization: $852.51 billion

5-year return: +216.71%, 1-year return: +46.78% (as of October 5, 2025).

Annual dividend yield: 1.94%, or $6.00 per share.

A transnational financial conglomerate and one of the biggest banking institutions in the world, JPMorgan Chase is a global leader in retail banking and financial services for individuals and small businesses. It also helps clients manage assets. The bank plays a major role in mergers and acquisitions and provides corporate services in the international capital markets. Its shares are included in the S&P 500 and Dow Jones indices.

Morgan Stanley (MS) could also appear in this list — it shows similar one-year and five-year returns as well as a long-term upward trend. However, during periods of broad market recession, such as the dot-com crash in 2000, the mortgage crisis in 2008, and the pandemic in 2020, JPMorgan Chase proved more resilient and less volatile.

Royal Bank of Canada (RY)

Country: Canada.

Capitalization: CAD 288.11 billion

5-year return: +117.52%, 1-year return: +23.38% (as of October 5, 2025).

Annual dividend yield: 3.00%, or CAD 6.16 per share.

One of the largest Canadian commercial and investment banks. Its history dates back to 1864. This universal bank provides financial and depository services to governments and institutions across North America, Europe, and the Asia-Pacific region, and also operates an insurance division.

There’s a common stereotype that traders should focus on bank shares from the US and Europe. However, banks in those regions tend to suffer the most during recessions. The Canadian banking system, despite its close ties to the US, has remained relatively stable through crises. Royal Bank of Canada shares have constantly been reaching new record highs.

Analysis of dividend yield and bank stock performance

Many banking sector stocks pay dividends, but their dividend yields are moderate compared to those of companies in other industries. According to one analytical portal, the median in the banking industry ranges between 2.9% and 3.3% annually. Another source reports slightly lower figures as of January 2025.

Regional banks often offer higher dividend yields than large financial conglomerates, though their yields remain modest compared to the 4–5% seen in other industries. Another issue is payout stability: dividends often fluctuate during recessions. For instance, UniCredit’s dividend payments were suspended in 2017 and 2020. Investors seeking more predictable money income might consider preference shares.

Conclusion

Let’s recap:

• Bank equities are volatile instruments, and it’s generally wiser to invest in them after a market downturn. Investing in bank shares involves exposure to risk.
• The fact that a bank operates across multiple regions does not guarantee its stability during recessions, as the 2008 crisis clearly showed.
• Systemic importance also doesn’t imply integrity. Fraud and manipulation can severely damage a bank’s reputation, causing its stock price to collapse and, in some cases, never recover. One well-known example is the LIBOR rate manipulation scandal involving Barclays, Lloyds, UBS, Société Générale, Citigroup, Rabobank, Deutsche Bank, and JPMorgan Chase.
• Dividend yields in the banking industry are generally moderate and not always consistent.
• Smaller banks can still be an attractive asset as they have more room for growth than large financial conglomerates.

Ready to explore bank stock analysis in practice? Try trading bank shares such as Citigroup (C), Goldman Sachs (GS), or JPMorgan Chase (JPM) on a demo account with LiteFinance and identify the top bank equities to add to your portfolio.