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After a rough year in 2022, bank stocks have navigated a fresh minefield in 2023. Rising interest rates triggered a sharp decline in long-term bond prices, resulting in massive losses for banks holding them on their balance sheets. As a result, a handful of U.S. regional banks collapsed in March and April as a banking crisis rattled Wall Street. Bank investors are understandably concerned about a tight credit market and the potential for slowing loan growth, but weakness in high-quality bank stocks could also prove to be an excellent long-term buying opportunity for investors.
Here are eight of the best bank stocks to buy in 2023, according to CFRA Research analysts:
| Stock | Implied upside from Nov. 6 closing price |
| JPMorgan Chase & Co. (ticker: JPM) | 21.5% |
| HSBC Holdings PLC (HSBC) | 13.4% |
| Bank of Montreal (BMO) | 26.1% |
| PNC Financial Services Group Inc. (PNC) | 31.6% |
| M&T Bank Corp. (MTB) | 23.7% |
| Fifth Third Bancorp (FITB) | 18.7% |
| Regions Financial Corp. (RF) | 16.3% |
| East West Bancorp Inc. (EWBC) | 28.9% |
JPMorgan Chase & Co. (ticker: JPM)
JPMorgan Chase is one of the largest global financial services companies, with nearly $4 trillion in assets. Analyst Kenneth Leon says JPMorgan is outperforming its big bank peers in most of its businesses, and its 18% return on equity in the third quarter is up from 15% a year ago. In addition, Leon is bullish on the bank’s acquisition of First Republic Bank, including about $92 billion in deposits and $30 billion of securities. He says JPMorgan has ample reserves to navigate a potential recession. CFRA has a “buy” rating and $175 price target for JPM stock, which closed at $144.08 on Nov. 6.
HSBC is a multinational banking and financial services provider and has more than 39 million customers. Analyst Firdaus Ibrahim says HSBC’s pre-tax profit of $7.7 billion in the third quarter was up 139% from a year ago on easy comparisons. Rising interest rates boosted the bank’s net interest income by 14% and fee income by 5% in the quarter. In addition, Ibrahim says HSBC’s wealth and personal banking segment is performing well in the current climate, and HSBC has maintained stable credit losses. CFRA has a “buy” rating and $43 price target for HSBC stock, which closed at $37.93 on Nov. 6.
Bank of Montreal is one of the largest Canadian commercial banks. Analyst Alexander Yokum says the bank’s below-average residential mortgage exposure has helped insulate it from a difficult Canadian housing market. Yokum says lower exposure to mortgages will likely help Bank of Montreal continue to outperform many Canadian banking peers. In addition, he says the acquisition of Bank of the West will help Bank of Montreal increase its geographical diversification and reduce risk. Finally, the bank’s gross impaired loans ratio of just 0.41% indicates strong credit quality. CFRA has a “buy” rating and $100 price target for BMO stock, which closed at $79.29 on Nov. 6.
PNC Financial Services Group Inc. (PNC)
PNC Financial Services is one of the largest U.S. banks, offering asset management and traditional, corporate and institutional banking services. PNC shares are down 23% through Nov. 6 this year due to the U.S. regional banking crisis, but Yokum says investors should be buying the dip given how well PNC management is executing in a difficult environment. He says PNC benefits from geographical diversification, a strong branch network and a relatively small average account size. PNC’s loan-to-deposit ratio of 75% is impressive relative to the regional bank average of 84%. CFRA has a “strong buy” rating and $160 price target for PNC stock, which closed at $121.55 on Nov. 6.
M&T Bank is a U.S. regional, commercial-focused bank offering banking, trust and investment services primarily in the Northeast and Mid-Atlantic regions. Yokum says M&T has navigated the difficult environment impressively in 2023, including maintaining deposit balances without significantly reducing net interest margin. He says the bank’s responsible management of its securities portfolio during the extended period of low interest rates in the 2010s allowed M&T to avoid the unrealized losses that plagued the industry in 2023 and caused liquidity issues among other regional banks. CFRA has a “buy” rating and $150 rating for MTB stock, which closed at $121.31 on Nov. 6.
Fifth Third Bancorp (FITB)
Fifth Third Bancorp is a U.S. regional bank that offers retail and commercial banking, consumer lending and asset management services in the Midwest and Southeast regions. Yokum says Fifth Third’s small average deposit account size makes it less susceptible to deposit pressures than many of its regional banking peers. In addition, only 1.2% of the bank’s loan portfolio is exposed to the struggling office sector. Yokum says Fifth Third is gaining market share by focusing on middle-market commercial lending and expanding into the Southeast region. CFRA has a “buy” rating and $31 price target for FITB stock, which closed at $26.12 on Nov. 6.
Regions Financial Corp. (RF)
Regions Financial is a U.S. regional bank that provides banking and wealth management services in 16 states in the South and Midwest regions. Yokum says Regions has a long-term track record of outperforming its peer group, and the bank’s limited exposure to commercial real estate and office loans will serve it well in the current market. He is bullish on Regions’ diversified business model and says the bank’s relatively high level of insured deposits reduces risk for investors. Yokum projects 5% revenue growth in 2023. CFRA has a “buy” rating and $18 price target for RF stock, which closed at $15.48 on Nov. 6.
East West Bancorp Inc. (EWBC)
East West Bancorp is a regional commercial bank that has locations in both the U.S. and China, providing consumer and commercial services. Yokum says East West is “extremely well capitalized” and has not suffered from the large securities losses hitting many other banks. In fact, East West has returned to share buybacks at a time in which several banks have been forced to focus on boosting capital. East West’s deposits even hit an all-time high in the third quarter. CFRA has a “strong buy” rating and $75 price target for EWBC stock, which closed at $58.20 on Nov. 6.
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