Watch these 10 large-cap banks in 2025, among other predictions from Barclays

Among Barclays' predictions for bank stocks in 2025, the firm sees stocks driving higher, EPS growth accelerating, and multiples expanding. The firm's equity research team covering large-cap banks, headed by Jason Goldberg, issued 10 top-10 lists for the sector in 2025. Here are a few of them:

Top 10 large cap bank predictions for the year:

1. Bank stocks will climb, outperforming the S&P 500;
2. The median bank's operating earnings will increase at a double-digit rate after modest growth in 2024;
3. Net interest income and fee income will rise at the median bank for the first time since 2019;
4. Industry-wide loans and deposits will increase by a greater amount than in 2024;
5. The investment banking fee pool will rise by more than 20% for the second straight year;
6. The median bank will generate positive operating leverage after two straight years in negative territory;
7. Industry-wide net charge-offs will be little changed;
8. Most banks will boost dividends and the pace of share repurchases for Barclays' bank composite will accelerate;
9. The heads of the FDIC, OCC, CFPB SEC, FTC, FHFA, and the Fed vice chair for supervision will change early in 2025 (which had already been reported). Wells Fargo's (NYSE:WFC) asset cap will be lifted;
10. At least three bank acquisitions with a deal value over $2B will be announced in 2025, after no such transaction in 2024.

Top 10 risks for bank stocks:

1. Economy: 2% GDP growth, 4% unemployment, and steeper yield curve aren't guaranteed;
2. Election impact uncertainty: While lower regulation is expected, policy details are unclear and timing is uncertain;
3. Import tariffs and/or immigration restriction: Implementation of the campaign promises could affect the economy, loan growth, asset quality, and inflation/interest rates;
4. Asset quality: Keep an eye on lower-end consumer, commercial real estate (especially office), leverage lending, and pockets of commercial & industrial.
5. Loan growth may not rebound after several quarters of subdued growth;
6. Deposit betas fared worse than expected in the past tightening cycle;
7. Competitive landscape: The country's 4,517 banks are also competing with non-banks, fintech, big tech, and crypto;
8. The Russia/Ukraine conflict, the Middle East, and China top the geopolitical risks;
9. Cyberattack risks have increased, especially amid geopolitical tension and AI advancement; and
10. Secular shift: The rise of hybrid work, the transition away from fossil fuels, the accelerating use of AI, and evolving non-bank financial institutions could all have implications.

Top 10 large cap bank stocks to watch in 2025:

1. Citigroup (NYSE:C): Achieving its 11%-12% ROTCE target in 2025 will require higher revenue, strict expense discipline, and increased share repurchases;
2. Truist Financial (NYSE:TFC): It's the only large-cap bank stock to decline over the past four years; Goldberg sees shareholders anxious for improvement after the sale of its insurance unit, balance sheet restructuring, and cost-cutting measures in 2024;
3. Wells Fargo (NYSE:WFC) could see its asset cap lifted after seven years in place;
4. JP Morgan Chase (NYSE:JPM): Uses for mounting excess capital are in question; CEO Jamie Dimon's special incentive hits next year;
5. KeyCorp (NYSE:KEY): After Scotiabank (BNS) took a 14.9% stake in the company, swap/Treasury maturities and securities portfolio restructuring should boost net interest income more than 20%;
6. U.S. Bancorp (NYSE:USB) called for "meaningful positive operating leverage" at its September investor Day;
7. PNC Financial Services (NYSE:PNC) has been upbeat on its growth prospects, but has also made successful acquisitions;
8. Ally Financial (NYSE:ALLY) : "After being the worst stock price performer last year as retail auto asset quality and its net interest margin disappointed, investors are trying to gauge 2025 as CEO Michael Rhodes tackles his first full year," Goldberg wrote.
9. Northern Trust (NASDAQ:NTRS): A revamped management team is set to tackle persistent expense pressures as it combats recent relative underperformance;
10. Citizens Financial Group (NYSE:CFG) has "several balls in the air" — balance sheet optimization, wealth management build-out, NYC metro expansion, top 10 initiative, swap program, and relatively large office CRE book.