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The year 2022 has been turbulent for the banking industry. It started on an encouraging note, with the Federal Reserve ending the low-interest rate regime (at present, the short-term interest rates are at a 15-year high of 4.50%) to control persistent inflation. After two years of COVID-19-related mayhem and ambiguity, banks witnessed robust improvement in the lending scenario. These factors, along with initiatives taken to support fee income, majorly supported their top-line growth.
But as the year progressed, several other macroeconomic and geopolitical matters, including global supply-chain disruptions and the ongoing Russia-Ukraine conflict, wreaked havoc with investors’ confidence. Also, as inflation turned out to be more “sticky” than expected, the central bank was forced to take unprecedented measures to tackle the same. This ultra-aggressive monetary policy stance has led market participants to expect an economic slowdown or recession in 2023.
These headwinds turned investors bearish toward the banking stocks. So far this year, the S&P Banks Select Industry Index has declined 17.4%. Almost all banks lost value this year, with some less impacted than others. Today, we will discuss the three best-performing S&P 500 banks – Regions Financial Corporation (RF - Free Report) , M&T Bank Corporation (MTB - Free Report) and Huntington Bancshares Incorporated (HBAN - Free Report) – of 2022.
Before we proceed to check out these three top-performing banks in detail, let’s see how they have fared. The chart below shows the price performance of these banks in the year-to-date period.
Image Source: Zacks Investment Research
Regions Financial
Regions Financial is a Birmingham, AL-based financial holding company providing retail and commercial and mortgage banking, and other financial services. RF operates through four business segments – Corporate Bank, Consumer Bank, Wealth Management and Others.
Regions Financial keeps exploring opportunities for bolt-on buyouts, primarily in mortgage servicing rights, besides adding capabilities in the wealth management division. As the company is committed to diversifying its revenue streams, such endeavors will likely support growth in the long term.
Further, Regions Financial’s asset-sensitive position will benefit majorly from the rising rate environment. Its acquisition of EnerBank, strong lending pipeline and strategic asset growth are expected to contribute to net interest income (NII) increase.
Regions Financial has a solid balance sheet position. Its robust cash position shows the ability to meet debt obligations if the economic situation worsens. The company’s strong balance sheet and consistent earnings make its capital-deployment activities sustainable. The bank has a dividend yield of 3.86% and a five-year annualized dividend growth of 13.4%. At present, RF's payout ratio is 37% of earnings.
The stock has lost 3.4% so far this year. While the company’s earnings are projected to witness a year-over-year decline of 6.4% this year, the same is expected to rise 6.7% for 2023. The company currently has a Zacks Rank of 3 (Hold).
M&T Bank
M&T Bank Corporation, headquartered in Buffalo, NY, is the holding company for M&T Bank and Wilmington Trust, National Association. MTB operates in New York, MD, New Jersey, PA, Delaware, CT, Virginia, WV and the District of Columbia.
Organic growth, driven by higher fee income, rising rates and solid loans and deposits, will likely continue leading to revenue growth for MTB. The company is growing inorganically backed by a sound liquidity position. The acquisition of People's United Financial (completed April 2022) for $8.3 billion is expected to be accretive to its earnings and realize cost savings of $330 million by early 2023.
Further, this Zacks Rank #3 company seems to be well-positioned in terms of its liquidity profile and is likely to be able to continue meeting its debt obligations if the economic situation worsens. Also, the bank has come a long way in displaying its capital strength, as indicated by its impressive capital deployment activities. The company has a dividend yield of 3.42% and a five-year annualized dividend growth of 8.9%. Also, MTB's payout ratio is 36% of earnings at present.
In the year-to-date period, MTB stock has declined 6.9%. For 2022 and 2023, the company’s earnings are projected to grow 4.6% and 34.6%, respectively, on a year-over-year basis.
Huntington Bancshares
Columbus, OH-based Huntington Bancshares is a multi-state diversified regional bank holding company. Its inorganic expansion moves and growth in loans and deposits balance are expected to drive long-term growth.
Over the past years, Huntington Bancshares has expanded its footprint with a number of acquisitions. In 2021, it closed the merger with TCF Financial Corporation, thus becoming one of the top 25 U.S. bank holding companies. The company is also expanding via acquisitions to bolster its fee income and digital capabilities. Such steps have strengthened HBAN’s position in existing markets and established a presence in new markets.
With the Fed aggressively raising interest rates and expectations of a similar stance in the near term, Huntington’s NII is expected to witness robust growth. Also, this Zacks Rank #2 (Buy) bank has a steady capital deployment plan in place. HBAN has a dividend yield of 4.5% and a five-year annualized dividend growth of 6.4%. Also, the company’s payout ratio is 43% of earnings at present.
So far this year, the stock has declined 9.2%. For 2022 and 2023, the company’s earnings are projected to rise 36.1% and 5.8%, respectively, on a year-over-year basis.
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3 Best Performing S&P 500 Bank Stocks of 2022
The year 2022 has been turbulent for the banking industry. It started on an encouraging note, with the Federal Reserve ending the low-interest rate regime (at present, the short-term interest rates are at a 15-year high of 4.50%) to control persistent inflation. After two years of COVID-19-related mayhem and ambiguity, banks witnessed robust improvement in the lending scenario. These factors, along with initiatives taken to support fee income, majorly supported their top-line growth.
But as the year progressed, several other macroeconomic and geopolitical matters, including global supply-chain disruptions and the ongoing Russia-Ukraine conflict, wreaked havoc with investors’ confidence. Also, as inflation turned out to be more “sticky” than expected, the central bank was forced to take unprecedented measures to tackle the same. This ultra-aggressive monetary policy stance has led market participants to expect an economic slowdown or recession in 2023.
These headwinds turned investors bearish toward the banking stocks. So far this year, the S&P Banks Select Industry Index has declined 17.4%. Almost all banks lost value this year, with some less impacted than others. Today, we will discuss the three best-performing S&P 500 banks – Regions Financial Corporation (RF - Free Report) , M&T Bank Corporation (MTB - Free Report) and Huntington Bancshares Incorporated (HBAN - Free Report) – of 2022.
Before we proceed to check out these three top-performing banks in detail, let’s see how they have fared. The chart below shows the price performance of these banks in the year-to-date period.
Image Source: Zacks Investment Research
Regions Financial
Regions Financial is a Birmingham, AL-based financial holding company providing retail and commercial and mortgage banking, and other financial services. RF operates through four business segments – Corporate Bank, Consumer Bank, Wealth Management and Others.
Regions Financial keeps exploring opportunities for bolt-on buyouts, primarily in mortgage servicing rights, besides adding capabilities in the wealth management division. As the company is committed to diversifying its revenue streams, such endeavors will likely support growth in the long term.
Further, Regions Financial’s asset-sensitive position will benefit majorly from the rising rate environment. Its acquisition of EnerBank, strong lending pipeline and strategic asset growth are expected to contribute to net interest income (NII) increase.
Regions Financial has a solid balance sheet position. Its robust cash position shows the ability to meet debt obligations if the economic situation worsens. The company’s strong balance sheet and consistent earnings make its capital-deployment activities sustainable. The bank has a dividend yield of 3.86% and a five-year annualized dividend growth of 13.4%. At present, RF's payout ratio is 37% of earnings.
The stock has lost 3.4% so far this year. While the company’s earnings are projected to witness a year-over-year decline of 6.4% this year, the same is expected to rise 6.7% for 2023. The company currently has a Zacks Rank of 3 (Hold).
M&T Bank
M&T Bank Corporation, headquartered in Buffalo, NY, is the holding company for M&T Bank and Wilmington Trust, National Association. MTB operates in New York, MD, New Jersey, PA, Delaware, CT, Virginia, WV and the District of Columbia.
Organic growth, driven by higher fee income, rising rates and solid loans and deposits, will likely continue leading to revenue growth for MTB. The company is growing inorganically backed by a sound liquidity position. The acquisition of People's United Financial (completed April 2022) for $8.3 billion is expected to be accretive to its earnings and realize cost savings of $330 million by early 2023.
Further, this Zacks Rank #3 company seems to be well-positioned in terms of its liquidity profile and is likely to be able to continue meeting its debt obligations if the economic situation worsens. Also, the bank has come a long way in displaying its capital strength, as indicated by its impressive capital deployment activities. The company has a dividend yield of 3.42% and a five-year annualized dividend growth of 8.9%. Also, MTB's payout ratio is 36% of earnings at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the year-to-date period, MTB stock has declined 6.9%. For 2022 and 2023, the company’s earnings are projected to grow 4.6% and 34.6%, respectively, on a year-over-year basis.
Huntington Bancshares
Columbus, OH-based Huntington Bancshares is a multi-state diversified regional bank holding company. Its inorganic expansion moves and growth in loans and deposits balance are expected to drive long-term growth.
Over the past years, Huntington Bancshares has expanded its footprint with a number of acquisitions. In 2021, it closed the merger with TCF Financial Corporation, thus becoming one of the top 25 U.S. bank holding companies. The company is also expanding via acquisitions to bolster its fee income and digital capabilities. Such steps have strengthened HBAN’s position in existing markets and established a presence in new markets.
With the Fed aggressively raising interest rates and expectations of a similar stance in the near term, Huntington’s NII is expected to witness robust growth. Also, this Zacks Rank #2 (Buy) bank has a steady capital deployment plan in place. HBAN has a dividend yield of 4.5% and a five-year annualized dividend growth of 6.4%. Also, the company’s payout ratio is 43% of earnings at present.
So far this year, the stock has declined 9.2%. For 2022 and 2023, the company’s earnings are projected to rise 36.1% and 5.8%, respectively, on a year-over-year basis.