The banking sector is currently facing several persistent headwinds but is also poised to capitalize on key catalysts expected to emerge in the foreseeable future. On January 15, S&P Global shared key risk themes expected for the banking sector in 2026, following its resilient performance over the prior 12 months. Among the notable ones is the sector’s tail risk, stemming from acceleration across nonbanking financial segments, technology disruptions, and sovereign-level debt linkages.
Despite some improvement in non-performing loans (NPLs), the firm anticipates a more cautious commercial lending approach by banks. This goes back to tighter industry regulations aimed at fostering stability across the broader banking landscape. On the corporate side, 2026 will witness continued burden for institutional borrowers despite recent monetary easing. This is attributed to prior tightening measures, which resulted in high financing costs and will keep borrowers exposed to high debt-servicing pressures.
Importantly for banks, the firm expects profitability to remain above historical levels even after projecting lower net margins due to recent rate cuts. For investors, it still continues to be an attractive sector that offers stable dividends along with capital appreciation potential.
With that background, let’s explore our 10 best banking stocks to buy according to hedge funds.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed banking companies with market capitalizations above $2 billion. From this pool, we shortlisted only stocks with at least 10% upside potential according to TipRanks consensus, as of the February 23 closing.
Next, we identified the number of hedge funds holding positions in these stocks as of the end of the third quarter of 2025. Finally, we selected 10 stocks with the highest number of hedge fund holdings and ranked them in ascending order. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Huntington Bancshares (NASDAQ:HBAN)
Number of Hedge Fund Holders: 42
Huntington Bancshares (NASDAQ:HBAN) is one of the 10 best banking stocks to buy according to hedge funds.
On February 3, John Pancari from Evercore ISI resumed coverage of Huntington Bancshares (NASDAQ:HBAN) with an Outperform rating and $21 price target, after the acquisition of Cadence Bank. This results in an upside potential of almost 23% at the current level.
The analyst sees Huntington as one of the most proactive regional banks in his coverage universe. He highlights the bank’s expanded scale and stronger presence in high-growth Texas and Southeast markets following the acquisitions of Veritex Holdings and Cadence.
On February 9, Huntington Bancshares (HBAN) made an announcement regarding the finalization of its merger with Cadence Bank (CADE). While current Cadence Bank customers will continue to use the existing branch network, a full-scale conversion of customer accounts is planned for mid-2026.
Huntington Bancshares (NASDAQ:HBAN) is a bank holding company that primarily delivers commercial, consumer, and mortgage banking services. Some of its offerings include lending, payments, deposits, investment management, brokerage, and insurance. Moreover, it offers other financial services, including wealth management, risk management, and capital market solutions.
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