10 of the Best Bank Stocks to Buy for 2022

Analysts see big upside for these undervalued bank stocks.

After a big year in 2021 and a hot start to 2022, bank stocks have lagged in recent months. The combination of a recovering U.S. economy and the potential for aggressive Federal Reserve interest rate hikes could set up bank stocks for outsize earnings growth in the next couple of years. However, exposure to the Ukraine war and the possibility of slowing loan growth have weighed on bank stocks as of late. Despite the recent volatility, analysts say many bank stocks remain undervalued. Here are 10 of the best bank stocks to buy in 2022, according to Wall Street analysts.

JPMorgan Chase & Co. (ticker: JPM)

Shares of U.S. megabank JPMorgan Chase took a big hit in April when CEO Jamie Dimon said the bank faces “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine.” Despite the uncertainties, Bank of America analyst Ebrahim Poonawala says there are still plenty of things to like about JPMorgan. The bank’s May investor day event should provide investors with much-needed updates on JPMorgan’s long-term financial outlook, which Poonawala says could be a bullish catalyst. Bank of America has a “buy” rating and $155 price target for JPM stock, which closed at $120.45 on May 2.

Wells Fargo & Co. (WFC)

Wells Fargo recently missed consensus revenue estimates and reported a 33% drop in home lending in the first quarter, sending its stock tumbling. However, Poonawala says the stock’s post-earnings sell-off was an overreaction given the bank’s potential to hit its goal of a 15% return on average tangible common shareholders’ equity, or ROTCE, within the next several quarters. He says Citigroup offers investors the best risk/reward skew among its big-bank peers and has the most attractive valuation, trading at less than 7 times forward earnings. Bank of America has a “buy” rating and $61 price target for WFC stock, which closed at $43.67 on May 2.

Citigroup Inc. (C)

Citigroup has been a frustrating investment for years. Not only is the stock down 19% in 2022, it is down 19% over the last five years. At this point, Poonawala says Citigroup market sentiment may have reached “peak pessimism.” Poonawala says Citigroup’s exposure to Russia and Ukraine appears to be manageable, and he projects $19 billion in share buybacks through the end of 2024. Poonawala says Citigroup management will first need to win back investors’ confidence before the stock can outperform. Bank of America has a “buy” rating and $60 price target for C stock, which closed at $48.71 on May 2.

M&T Bank Corp. (MTB)

M&T Bank is a commercial-focused U.S. regional bank that operates in eight states in the Northeast and Mid-Atlantic region. M&T is the only bank on this list that has generated a positive return so far in 2022, gaining 8.4% year to date. Poonawala is projecting $2 billion per quarter in net growth for the bank’s securities book through the end of the year. In addition, Poonawala projects spread revenue growth of 48% in 2022 and 26% in 2023 as interest rates rise. Bank of America has a “buy” rating and $210 price target for MTB, which closed at $168.23 on May 2.

Bank of America Corp. (BAC)

Bank of America had one of the best first-quarter earnings reports among large U.S. banks, and it reported a 52% decline in net loan charge-offs in the quarter. Morningstar analyst Eric Compton says Bank of America is on track for “rapid net interest income growth” in coming quarters, which will help the bank offset slowing fee revenue growth. Compton said Bank of America will continue to gain market share with its commercial offerings and will even close its return profile performance gap with JPMorgan over time. Morningstar has a “buy” rating and $41 fair value estimate for BAC stock, which closed at $36.14 on May 2.

U.S. Bancorp (USB)

U.S. Bancorp is one of the largest U.S. banks by deposits and offers a wide range of banking, wealth management, insurance and other financial services. Compton says U.S. Bancorp had a “decent” first quarter, which included accelerating loan growth and an improved revenue outlook. U.S. Bancorp’s merchant acquiring and commercial payments businesses are positioned for a rebound in 2022. Compton says the U.S. Bancorp management team is one of the best in the banking business, and few competitors match its operating efficiency. Morningstar has a “buy” rating and $61 fair value estimate for USB stock, which closed at $48.85 on May 2.

PNC Financial Services Group (PNC)

PNC Financial Services is one of the five largest U.S. banks by deposits and has a diverse business model that includes traditional banking, asset management and commercial mortgage services. Like other U.S. banks, PNC’s revenue is benefiting from rising interest rates, but fee income growth is slowing, Compton says. He says provisioning benefits generated from the release of loss reserves have helped PNC offset weakness in its fee business. Compton says investors should expect efficiency improvements and additional revenue synergies from PNC’s acquisition of BBVA. Morningstar has a “buy” rating and $185 fair value estimate for PNC stock, which closed at $167.54 on May 2.

Truist Financial Corp. (TFC)

Truist Financial is one of the largest U.S. regional banks and was formed from the merger of BB&T and SunTrust in late 2019. CFRA analyst Alexander Yokum is bullish on Truist’s exposure to the rapidly growing Mid-Atlantic and Southeastern U.S. markets. He says Truist has leading market positions in investment banking, mortgage banking and insurance brokering in these regions. In addition, Truist is targeting $1.6 billion in post-merger cost savings, and the stock pays a sizable 3.8% dividend. CFRA has a “buy” rating and $61 price target for TFC stock, which closed at $48.94 on May 2.

SVB Financial Group (SIVB)

SVB Financial is the parent of Silicon Valley Bank, a commercial bank that specializes in technology, life sciences, wineries, and private equity and venture capital firms. SVB shares are down 27% year to date as investors grow concerned that the public market pressures on tech sector valuations could eventually have a negative impact on SVB’s early-stage VC and PE customers. Yokum says rising interest rates will boost SVB’s net interest margins by between 0.35% and 0.4% by year’s end, and the bank’s credit risk profile remains strong. CFRA has a “buy” rating and $680 price target for SIVB stock, which closed at $497.67 on May 2.

Fifth Third Bancorp (FITB)

Fifth Third Bancorp is a U.S. regional bank with more than $200 billion in assets that operates primarily in the Midwest and Southeast. Yokum says Fifth Third’s profitability outlook is improving, and its diversified, fee-generating product portfolio makes the stock an attractive value for investors. Yokum says Fifth Third’s strategy of growing its middle-market commercial lending business, expanding its industry verticals and extending its geographical presence deeper into the fast-growing Southeastern region will help the bank increase its industry market share. He projects 15% net interest income growth in 2022. CFRA has a “buy” rating and $47 price target for FITB stock, which closed at $37.74 on May 2.

10 bank stocks that may thrive in 2022:

JPMorgan Chase & Co. (JPM) Wells Fargo & Co. (WFC) Citigroup Inc. (C) M&T Bank Corp. (MTB) Bank of America Corp. (BAC) U.S. Bancorp (USB) PNC Financial Services Group (PNC) Truist Financial Corp. (TFC) SVB Financial Group (SIVB) Fifth Third Bancorp (FITB)

More from U.S. News

2022’s 10 Best-Performing Stocks

7 Best Fidelity Mutual Funds to Buy and Hold

13 Long-Term Investing Strategies Advisors Love

10 of the Best Bank Stocks to Buy for 2022 originally appeared on usnews.com

Update 05/03/22: This story was published at an earlier date and has been updated with new information.

Related Categories:

Latest News

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up