The Best Bank Stocks to Buy

Banks, from large money centers to regional institutions, offer essential services like accounts, loans, and wealth management, catering to both global markets and local communities. This summer, some of the major banks also provided strong second-quarter results that may interest investors.

“The current operating environment for banks is exquisite, comprised of elevated interest rates, an attractively upward-sloping yield curve, record-breaking trading volume, strong commercial lending appetite, and benign credit,” says Austin Taggart, Morningstar analyst.

“This operating environment—combined with a shifting perspective that increased artificial intelligence adoption poses less disruption risk to the core banking business than earlier in the year, and improved disclosure that highlighted less downside risk associated with private credit—has led to a rally in bank stocks that effectively prices in the backdrop,” he adds.

In the year to date, the Morningstar US Financial Services Index rose 6.76%, while the Morningstar US Total Market Index gained 14.57%.

The 5 Best Bank Stocks to Buy Now

These were the most undervalued bank stocks that Morningstar’s analysts cover as of Aug. 12, 2026.

1. Nu Holdings NU
2. Regions Financial RF
3. NatWest Group NWG
4. Bank of America BAC
5. Wells Fargo WFC

To come up with our list of the best bank stocks to buy now, we screened for:

• Bank stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide
  Morningstar Economic Moat Ratings
  . We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.
• Stocks that earn a Low, Medium, High, or Very High
  Morningstar Uncertainty Rating
  , which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best bank stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of Aug. 12, 2026.

Nu Holdings

• Morningstar Price/Fair Value: 0.89
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: None
• Industry: Banks—Regional

Nu Holdings is the most affordable stock on our list of the best bank stocks to buy. Nu Holdings is a Brazilian financial technology firm that offers digital banking services. The stock is trading 11% below our fair value estimate of $15.30 per share.

In 2026, we expect Nubank to continue to focus on international growth, making major inroads into the Mexican and Colombian banking industries. This approach seems prudent to us; the firm has already been a major disruptive force in the Brazilian banking system thanks to the strong cost advantages of its fully digital banking platform, and those newer markets offer access to a largely untapped and reasonably affluent clientele. Exporting its competitively advantaged operating model to new markets, particularly ones with large unbanked or underbanked populations like Mexico and Colombia, seems like the logical choice, and we see significant long-term growth potential for Nubank from international expansion. Given its already expansive presence in Brazil, with over 60% of adults having an account with the firm, new customers will likely be increasingly difficult to find in its home market.

As a fully digital bank, Nubank operates without the heavy costs associated with operating expansive branch networks, like those of its traditional bank rivals. With more than twice the revenue per employee of its closest Brazilian competitors, Nubank can offer more-attractive terms and fees while still enjoying industry-leading profitability. It uses its superior value proposition to drive dramatic share gains in countries that have typically had heavily concentrated banking sectors with high fees.

Nubank offers a narrower line of lending products than the traditional banks it competes with, avoiding auto loans and mortgages. We like this approach, as it allows the company to focus on gaining competitive scale in its chosen markets and avoid lending categories where its cost of funds disadvantage would be more meaningful (consumer credit cards are more sensitive to underwriting than cost of funds). We think Nubank has built a competitively advantaged operating model that shows strong signs of portability between Latin American markets. We see significant room for secular growth as it pulls underbanked consumers into the financial system across multiple nations.

Read more about Nu Holdings here.

Regions Financial

• Morningstar Price/Fair Value: 0.95
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.47%
• Industry: Banks—Regional

Regions Financial is one of the midsized regional banks in the US, with around $160 billion in total assets as of the end of the first quarter of 2026. Trading 5% below our fair value estimate, Regions Financial has an economic moat rating of narrow. We think shares of this stock are worth $33.10 per share.

We think that Regions Financial’s commitment to improving its risk management and its renewed focus on profitable client relationships have served the bank well. The bank’s strong deposit franchise should continue to be a major driver of its superior return profile over peer regional banks in the future.

We believe Regions has made substantial progress in reducing credit risk since the global financial crisis. The bank was hit hard in 2008-09, primarily due to the poorly timed AmSouth acquisition and heavy real estate exposure. Since then, Regions has reduced commercial real estate concentrations and shifted toward more selective commercial lending. By our math, the firm’s CRE exposure fell to 9.5% of loans in 2025 from 25% in 2008, and investment-grade loans comprised 39% of the bank’s commercial portfolio in 2025, up from just 20% in 2010. We expect the bank’s disciplined underwriting to keep credit performance mostly in line with regional peers.

Regions has made clear progress toward improving its funding costs and operating efficiency. The bank now has one of the lowest funding costs in our coverage, which is a substantial improvement from its middling position in the years after the global financial crisis. Regions has placed significant emphasis on growing its low-cost demand deposits, and the bank benefits from being the only bank with a meaningful presence in certain rural deep south markets, enabling it to gather sticky, granular deposits. In addition, management has taken steps to streamline operations, reducing branch count by 36% between 2009-25, and the planned upgrade of the bank’s core system should support further efficiency gains once fully implemented in 2027. The bank now has an annual technology budget of 10% to 12% of revenue, compared with 9% to 11% in the past.

Regions has complemented these efforts with some tuck-in acquisitions to strengthen fee income. After selling Morgan Keegan in 2012, the bank acquired BlackArch, Clearsight, and Sabal to broaden its capital markets capabilities, while the Highland Associates acquisition enhanced its wealth management offering. Improved cross-selling could enhance the bank’s return profile over time.

Read more about Regions Financial here.

NatWest Group

• Morningstar Price/Fair Value: 0.96
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.90%
• Industry: Banks—Regional

Next on our list of the best bank stocks to buy is NatWest Group. NatWest Group derives around 90% of its total income from the UK. The stock is trading near our fair value estimate of $20.10 per share.

NatWest operates a strong retail and commercial banking franchise in the UK. Although the UK market is competitive, we think that NatWest’s large deposit share and access to low- or non-interest-bearing funding sources will allow the bank to derive healthy returns.

NatWest follows a prudent, low-risk growth strategy, aiming to retain front-book mortgage market shares similar to its back book while pursuing a greater share of noninterest income streams.

In mortgages, NatWest has a high market share in low-loan-to-value mortgages, which is profitable for the bank despite margin pressure, as it can deploy its low-cost funding in this segment. With partnerships, the bank also takes smaller exposure in more specialist mortgage lending, such as buy-to-let.

NatWest has benefited from the higher interest rate environment, although rates have been coming down slowly over the last two years. While mortgage margins remain under pressure due to the competitive nature of the UK mortgage market, higher deposit spreads have been a boon for NatWest. Inflation and base rates remain higher than in continental Europe, and current swap rates still result in structural hedge tailwinds. With many of these hedges written for 2026 already and partially for 2027, the support for net interest margins from the structural hedge is set to persist.

NatWest has significantly improved its capital base over the last decade, shedding or closing underperforming businesses and narrowing its focus on the UK market with small ancillary capital market operations. Excess capital, as a result of the previous government ownership and better capital efficiency, has been distributed to shareholders or has been deployed in small bolt-on acquisitions in the retail segment.

Read more about NatWest Group here.

Bank of America

• Morningstar Price/Fair Value: 0.98
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 1.98%
• Industry: Banks—Diversified

Bank of America is a formidable financial titan that commands a $3.3 trillion balance sheet and serves as a cornerstone of the American economy, with the second-largest deposit market share in the US. The firm earns a wide economic moat rating, and the shares of its stock look fairly valued relative to our $66 fair value estimate.

We view Bank of America’s strategy as a testament to the efficacy of a scaled, integrated model. Pursuing a core strategy of responsible growth, the company aims to grow in a way that looks good, leveraging its size and international presence to build a system that helps almost every customer, everywhere. While peers, particularly in Europe, have narrowed their service scope, Bank of America maintains formidable scale, allowing it to demonstrate a commitment to digital leadership and to reap the economic benefits of fractionalizing this expenditure across its retail, wealth, and institutional footprints. A prime example is Erica, its AI virtual assistant, which spans business lines and facilitated 200 million interactions in the second quarter of 2026, deeply embedding the bank into the operations of its 50 million active digital users.

Flexing this scale to offer a deep product shelf at competitive costs has allowed the firm to capture top-tier market share across various lines of business. Its retail operations hold the largest market share of US consumer deposits, serving 70 million clients through roughly 3,530 financial centers. The wealth management franchise provides sticky, fee-based revenue with approximately $4.9 trillion in client balances. Meanwhile, the firm’s trading operations and investment banking division consistently rank among the top four globally by revenue.

The “responsible” pillar of the firm’s growth framework is underpinned by an unwavering commitment to a disciplined risk framework. Bank of America intentionally skews its loan portfolio toward higher-quality borrowers, operating with strict underwriting standards that have yielded the lowest total loss rate among peers in 13 of the past 14 Federal Reserve stress tests. Though the banking industry is inherently cyclical, the firm maintains a highly capitalized, liquid foundation, anchored by an 11.2% common equity Tier 1 capital ratio and $960 billion in average global liquidity. This disciplined posture ensures through-the-cycle resilience and provides ample flexibility to continually fund organic growth and deliver robust shareholder returns.

Read more about Bank of America here.

Wells Fargo

• Morningstar Price/Fair Value: 0.99
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.25%
• Industry: Banks—Diversified

Wells Fargo rounds out our list of best bank stocks to buy. Wells Fargo is a premier, North American-focused banking titan that commands a $2.2 trillion balance sheet and the third-highest deposit market share in the US. The stock is fairly valued relative to our fair value estimate of $90 per share.

Wells Fargo’s strategy is geared to capitalize on the efficacy of a scaled, integrated financial-services model. Operating across retail banking, corporate financing, institutional capital markets, and wealth management, the firm leverages its reach to create a synergistic ecosystem across client types. Crucially, the removal of the long-standing asset cap in 2025 positions the bank more attractively to fully utilize and grow its already massive $2.3 trillion balance sheet. More specifically, Wells Fargo can now aggressively expand its loan portfolios to capture deposit market share without the artificial ceiling that has recently hindered its competitive position.

Looking ahead, we expect Wells Fargo to continue forging comprehensive digital ecosystems for both its retail and commercial clients. We view leveraging the firm’s scale to make substantial investments aimed at improving customer experience as an appropriate strategy, as the bank can fractionalize across its expansive footprint in a way that smaller peers simply cannot. These investments, in turn, allow the bank to deeply embed itself into the daily operations of both commercial and retail clients, utilizing much of the same data architecture and technology to support both platforms. For retail clients, this approach is manifested in holistic offerings like modernized mobile applications serving 33.5 million active users with features like Fargo, an artificial intelligence-powered assistant, and integrated payment solutions like Zelle and Paze. The firm leverages this shared infrastructure spending on the commercial side, enhancing its Vantage platform to seamlessly unify banking, lending, and foreign exchange services.

Underpinning the firm’s growth outlook is a revitalized commercial strategy with a formidable deposit-gathering engine tied to that segment. The firm emphasizes holistic corporate relationships by building out coverage in underpenetrated markets and capturing operational cash flows. Armed with this stable, low-cost funding base, the firm is exceptionally positioned to achieve its expected mid-single-digit loan and deposit growth targets while delivering robust shareholder returns.

Read more about Wells Fargo here.

How to Find More of the Best Bank Stocks to Buy

Investors who’d like to extend their search for top bank stocks can do the following:

• Review Morningstar’s comprehensive list of financial-services stocks to investigate further.
• Stay up to date on the financial-services sector’s performance, key earnings reports, and more with Morningstar’s financial-services sector page.
• Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
• Use the Morningstar Investor screener to build a shortlist of bank stocks to research and watch.