Banks have continued to impress investors with their largely solid results, according to UBS Equity Research’s Erika Najarian. Despite the sector’s undemanding valuations, banks remain attractive due to their strong performance. In this blog post, we will explore which banks are worth considering and why.

The GSIBs can be divided into premium valuation names such as JPMorgan, Morgan Stanley, and Goldman Sachs, which trade at around 10x 2027E earnings. Citigroup remains a popular long despite Thursday’s investor day, while Hedge Funds have moved on from Wells Fargo for now due to its challenging second-quarter NII. Bank of America, however, beat EPS by 7%, raised NII expectations, clarified second-quarter expenses, and is still down 2.1% since EPS season started.

Loan growth in this group was solid, but investors are concerned about what will happen to deposit costs if rate cuts do not materialize. Citizens Financial still has room to run, especially as Reimagine the Bank expenses seem front-end loaded to 2026. Huntington Bancshares is over-discounted but does not need any shift in guidance to re-rate the stock.

Capital One’s expectations have been reset fairly low, but Erika Najarian still sees a coiled spring of EPS power: material excess cash, growth to come later, strong deposit growth trends (parked in cash), conservative reserve rate in card, and strong CET1 levels even after Brex (-40bp to CET1) and before favorable B3 endgame outcome.