6 Best Bank Stocks To Watch As 2008 Financial Crisis Rules Are Eased

Forbes

12-07-2025

If regulators ease capital requirements as proposed, financial institutions will have more balance ... More sheet freedom to make loans or fund other growth opportunities.
Deregulation is a theme of the Trump administration, and bank stocks may soon benefit. In June 2025, regulators proposed a change to a 2014 rule enacted after the 2008 Financial Crisis. If approved, the update could free up capital for banks and financial companies to pursue growth.
Let's review which banking rules are changing, and meet six bank stocks most likely to benefit.
What Are The 2008 Financial Crisis Rules?
The 2008 Financial Crisis rules are U.S. regulatory changes enacted after several major U.S. financial companies failed in 2008. The failures contributed to a historic U.S. recession and a European debt crisis. The legislative reforms aimed to prevent similar economic crises from happening again.
The rules that may be eased in 2025 involve capital requirements. Capital includes cash and easily sold assets that can absorb losses and fund debt repayments. Regulators specify how much capital financial institutions must have relative to their debts. These requirements help to ensure financial stability and solvency through economic downturns.
Up for modification is the enhanced Supplementary Leverage Ratio (eSLR). Under current rules, the largest U.S. banks must have an eSLR of 5%. Proposed changes would lower that requirement to 3.5% to 4.25% at the big banks, depending on their risk profile. Other rules governing long-term debt and total loss-absorbing capacity would be updated to align with the new eSLR threshold.
Proponents say the changes will increase banks' participation in Treasury markets, promote lending and boost the economy. Detractors argue that easing the eSLR and related requirements will increase the chances of bank failures.
6 Best Bank Stocks To Watch
The table below highlights six large, globally important bank stocks that may soon see a reduction in their eSLR requirement. You may want to add these to your own list of best stocks for 2025.
A review of each financial company follows. Metrics are sourced from company reports and stockanalysis.com, unless noted otherwise.
1. Citigroup (C)
Citigroup by the numbers:
Citigroup operates through five businesses: services, markets, banking and international, wealth and U.S. personal banking. The first three cater to corporate and institutional clients and the last two serve consumers. Citigroup has a strong institutional client roster plus 70 million personal banking clients.
The bank has physical locations in 94 countries and operates in nearly 180 countries.
Last year, Citigroup was wrapping up a broad restructuring effort that trimmed its workforce by about 10%. Staff reductions and other cost-cutting efforts helped the company deliver 2024 net income of $12.7 billion, up 37% from the year before.
In the first quarter of 2025, Citigroup reported a 5% quarter-over-quarter decline in operating expenses—showing continued cost discipline. The bank also reported revenue growth in all five of its businesses.
Citigroup's financial position remains strong. At the end of the first quarter, the bank's Common Equity Tier 1 (CET1) was 13.4%. The CET1 ratio is the bank's core capital—primarily ordinary shares and retained earnings—as a percentage of risk-weighted assets. The ratio measures financial resilience. Higher is better.
The minimum CET1 ratio regulators require varies by institution. Citigroup's minimum is 12.1%.
2. The Bank of New York Mellon (BK)
The Bank of New York Mellon by the numbers:
BK is the holding company for Bank of New York Mellon or BNY. BNY is America's oldest bank and a specialist in custodial services. Custodian banks safeguard securities for their customers. BNY customers include Fortune 100 companies, governments and pension plans.
BK launched an enterprise-wide AI effort in 2023. The strategy led to the creation of an in-house AI platform that BK employees use for risk management, operational efficiency and predictive trade analytics.
The bank's digital transformation has been good for business. In 2023 and 2024, BK increased net income by 29% and 37%, respectively. In the same years, EPS grew 35% and 49% with help from BK's generous share repurchase activity. Share repurchases totaled $2.6 billion in 2023 and $3.1 billion in 2024.
First quarter highlights included revenue growth of 6% and diluted EPS growth of 26% from the prior-year quarter. The bank's CET1 ratio was 11.5%.
Also notable is BK's dividend program. The financial company has raised its dividend annually by at least 9% over the last three years. The current annual payout is $1.88, for a yield of 2%.
3. State Street Corporation (STT)
State Street Corporation by the numbers:
State Street is a large custodian bank that provides investment servicing solutions for institutional investors. The company's AI-enabled Alpha platform helps investors manage their assets and make data-driven decisions. State Street also offers ETFs and mutual funds through its State Street Investment Management business, formerly known as SSGA.
State Street's stock price is up nearly 12.5% for the year, after being down 25% in early April. Several analysts expect the gains to continue. Mike Mayo of Wells Fargo, Alexander Blostein from Goldman Sachs and Betsy Graseck from Morgan Stanley, among others, raised their STT price targets in July.
Acquisitions and partnerships have contributed to the optimism. International transactions, including the purchase of Mizuho Financial Group's global custody business, provide access to new growth markets for STT. Partnerships like the strategic relationship with Ray Dalio's hedge fund Bridgewater Associates support new offerings for existing customers.
State Street's first quarter earnings show progress on revenue and expenses. Total revenue was up 5% and fee revenue gained 6%. Expenses declined 3%. EPS rose 49% to $2.04. At quarter-end, State Street's CET1 ratio was 11%, down slightly from the prior-year quarter.
4. Bank of America (BAC)
Bank of America by the numbers:
Bank of America provides banking and other financial services to consumers and businesses in the U.S. and more than 35 countries. The bank is the largest small business lender domestically and has been ranked in the top three for global investment banking fees and global research.
At least six analysts have raised their price targets on BAC since early June. The consensus second quarter EPS outlook is $0.87, which represents 4.8% growth from last year.
For the first quarter, BAC reported 6% revenue growth, 3% net interest income growth, 3% growth in average deposit balances and 4% higher average loans and leases. Notably, it was the seventh consecutive quarter the bank increased average deposits. Diluted EPS was $0.90, up from $0.76 in the prior-year quarter. At quarter-end, the bank's CET1 ratio was 11.8%.
Bank of America pays a quarterly dividend of $0.26, for a yield of 2.2%. The bank also approved a $25 billion share repurchase program last year. Share repurchases in the first quarter totaled $4.5 billion.
5. Goldman Sachs (GS)
Goldman Sachs by the numbers:
Goldman Sachs is organized into three businesses: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Global Banking & Markets, the largest segment, provides investment banking services. Asset & Wealth Management manages money for institutions, advisors, foundations and high-net-worth individuals. Platform Solutions offers embedded financial products and a transaction banking platform.
Goldman Sachs has been making moves to leverage its expertise and reputation in investment banking and trading operations. Last year, the financial company sold a credit card business, home-improvement lending operation and personal financial management unit.
First quarter 2025 results indicate the refocus is driving results. The company earned $15 billion in net revenue, its third-highest quarterly sales result. The Global Banking & Markets business contributed $10.7 billion to that tally, partly due to record net revenues in Equities. GS also earned the top global ranking for announced and completed mergers and acquisitions and equity offerings.
Diluted EPS in the first quarter was $14.12, 22% higher than the prior-year quarter. GS also spent $4.6 billion on common share repurchases and authorized a new $40 billion repurchase program. The financial company's CET1 ratio is currently 14.83%, 1.23 percentage points higher than its required level.
6. Morgan Stanley (MS)
Morgan Stanley by the numbers:
Morgan Stanley is a wealth manager serving institutions, governments and consumers. The company offers investment banking services to businesses and governments, sales and trading support to hedge funds and active investment management services to people and institutions. Morgan Stanley also publishes investment research.
Morgan Stanley has two primary longer-term goals: to increase client assets to $10 trillion from $7.7 trillion currently, and to realize a 30% pre-tax margin in its Wealth Management business. The Wealth Management growth strategy involves acquiring new customers from ETrade, workplace channels and financial advisors.
The three-pronged approach has been effective. Since 2018, Morgan Stanley has increased the number of households served by 20 million, from 2.5 million to 22.5 million. The momentum is one reason why analysts expect the financial company to report EPS of $2.01 for the second quarter, up from $1.82 in last year's June quarter.
First quarter 2025 highlights for Morgan Stanley included quarter-over-quarter net revenue growth of 17% and diluted EPS growth of 29%. The Wealth Management pretax margin was 26.6% and the CET1 ratio at quarter-end was 15.3%.
Morgan Stanley also spent $1 billion on stock repurchases in the quarter and declared a $0.925 quarterly dividend.
Bottom Line
If regulators ease capital requirements as proposed, financial institutions will have more balance sheet freedom to make loans or fund other growth opportunities. The freedom does bring higher risk, so lean into banks with disciplined leadership teams and conservative lending practices.