In this piece we will look at the 5 Best European Bank Stocks to Buy According to Hedge Funds. Please visit 8 Best European Bank Stocks to Buy According to Hedge Funds if you’d like to see an extended list and how we came up with the list of Best European Bank Stocks to Buy According to Hedge Funds.
5. NatWest Group plc (NYSE:NWG)
Number of Hedge Fund Holders: 20
NatWest Group plc (NYSE:NWG) is one of the Best European Bank Stocks to Buy According to Hedge Funds. On May 11, NatWest Group plc (NYSE:NWG) was upgraded at BNP Paribas by analyst Guy Stebbings from Neutral to Outperform. The analyst has set a price target of $18.2 on the stock.
The rating comes after the company reported fiscal Q1 2026 results on May 1. The bank reported a 12% year-over-year increase in first-quarter profits before tax. The operating profit reached 2 billion pounds and came in ahead of the analyst consensus of 1.9 billion pounds. Management highlighted that results were driven by growth in lending income.
The results show that NatWest Group, like its peer Lloyds Banking Group plc (NYSE:LYG) has shown continued profitability despite geopolitical concerns from the Iran war. The bank also upgraded its full-year income guidance and expects the income to be near the top of its 17.2 billion to 17.6 billion pound range, signaling confidence in its near-term performance despite a more uncertain backdrop.
Reuters reported that the outlook was notably cautious. NatWest sharply revised down its UK economic forecasts and is now expecting GDP growth of just 0.4% for the year, compared to its earlier estimate of 1%, and house price growth of only 0.7% versus a prior forecast of 3.4%. These downgrades reflect rising inflation fears linked to oil price volatility and the ongoing Middle East conflict. The bank also took a 283 million pound impairment charge, with 140 million pounds directly tied to the economic impact of the Iran war.
NatWest Group plc (NYSE:NWG) provides banking and financial services in the United Kingdom and internationally.
4. ING Groep N.V. (NYSE:ING)
Number of Hedge Fund Holders: 21
ING Groep N.V. (NYSE:ING) is one of the Best European Bank Stocks to Buy According to Hedge Funds. On May 13, Deutsche Bank raised the firm’s price target on ING Groep N.V. (NYSE:ING) from EUR 29 to EUR 30, while maintaining a Buy rating on the shares.
The rating follows the company’s fiscal Q1 2026 earnings released on April 30. According to a report by Reuters on the same day, the company’s first-quarter profit came in at 1.56 billion euros, comfortably ahead of analyst forecasts of 1.43 billion euros and roughly 100 million euros higher than the same period last year. The profit growth was driven by a 13% growth in fee income, higher customer trading activity, and a growth of 7% to 4.06 billion euros in commercial net interest income.
Analysts at UBS suggest the commercial net interest income for the bank is expected to pick up again in 2026 and 2027. Looking ahead, ING Groep N.V. (NYSE:ING) confirmed its outlook for this year and next, though CEO Van Rijswijk offered a measured tone on interest rates. While potential rate hikes linked to Iran war inflation risks could boost lending income, he cautioned that gains in commercial income would likely be offset by weaker hedging and treasury results elsewhere.
ING Groep N.V. (NYSE:ING) is a financial services company. It provides banking, investment, and asset management services to individuals, businesses, and institutions. Its offerings include savings and current accounts, mortgages, consumer and business lending, payments, and corporate finance services across retail and wholesale banking segments.
3. Deutsche Bank Aktiengesellschaft (NYSE:DB)
Number of Hedge Fund Holders: 24
Deutsche Bank Aktiengesellschaft (NYSE:DB) is one of the Best European Bank Stocks to Buy According to Hedge Funds. On May 11, Tarik El Mejjad from Bank of America Securities reiterated a Buy rating on Deutsche Bank Aktiengesellschaft (NYSE:DB), with a price target of €38.
The analyst noted that they see improving underlying performance for the bank despite the recent weakness in the share price. The analyst highlighted that recent market volatility and one-off events have overshadowed strong trends in the core business. El Mejjad pointed towards accelerating growth in loans and a notable reduction in the normalized cost of risk.
That said, the company during its fiscal first quarter of 2026 reported record net profit of 1.912 billion euros. This comes despite the company setting aside 90 million euros for the impact of the Iran war and depressed revenue at its global investment bank due to a weaker dollar.
Deutsche Bank Aktiengesellschaft (NYSE:DB) was also recently included in our list of the 10 Best Global Stocks to Buy According to Wall Street Analysts.
2. Barclays PLC (NYSE:BCS)
Number of Hedge Fund Holders: 29
Barclays PLC (NYSE:BCS) is one of the Best European Bank Stocks to Buy According to Hedge Funds. On May 6, Jefferies reiterated a Buy rating on Barclays PLC (NYSE:BCS) with a price target of p590.
The rating comes after the company on April 28 posted fiscal first quarter 2026 results. According to a report by Reuters published on the same day, the bank posted profit before tax of 2.8 billion pounds, slightly up from £2.7 billion the year prior, broadly meeting analyst expectations. However, the results were overshadowed by two notable charges, including a 228 million pound provision tied to the collapse of MFS, a London-based property lender, and an additional 100 million pound set aside for compensation related to a UK car finance mis-selling scandal.
The report also highlighted that the bank’s share buyback of 500 million pounds also disappointed, falling short of the 614 million pounds that analysts had anticipated. On the bright side, the investment bank performed solidly with income rising 4% year-on-year to 4 billion pounds, slightly ahead of forecasts. Moreover, the equities trading revenue surged 23%, and fixed income rose by 8%.
Despite this, Barclays lagged behind its Wall Street peers across most metrics. CEO C.S. Venkatakrishnan acknowledged the widening competitive gap created by US deregulation under President Trump; the CEO warned of growing “competitive friction” that European banks must work harder to overcome.
Headquartered in London, Barclays PLC (NYSE:BCS) is a bank holding company that provides credit cards, retail banking, wealth management, and corporate and investment banking services.
1. UBS Group AG (NYSE:UBS)
Number of Hedge Fund Holders: 39
UBS Group AG (NYSE:UBS) is one of the Best European Bank Stocks to Buy According to Hedge Funds. On May 13, Deutsche Bank analyst Benjamin Goy raised its price target on UBS Group AG (NYSE:UBS) from CHF 39 to CHF 40 and maintained a Buy rating on the shares.
Deutsche Bank’s rating comes after UBS announced fiscal Q1 2026 earnings on April 29. During the quarter, the bank posted $3.0 billion in net profits, representing 80% year-over-year growth and beating the average estimate of $2.3 billion. Management noted the standout drivers to be record trading revenue in its investment banking division, where income surged 27%, driven by market turbulence linked to the Iran war. Moreover, global wealth management added $37 billion in net new assets, with a notable $5.3 billion inflow from the Americas reversing prior-quarter outflows in that key growth market.
A recent report by Reuters highlighted that despite strong results, the attention has shifted towards regulatory pressures from Switzerland’s newly proposed banking bill, which could require UBS to raise an additional $20 billion in core capital.
The report noted that while UBS Group AG (NYSE:UBS) has reaffirmed its commitment to at least $3 billion in share buybacks for 2026, CEO Sergio Ermotti cautioned that second-half buyback ambitions hinge on greater clarity from parliament on capital rules.
UBS Group AG (NYSE:UBS) is a global financial institution that provides wealth management, personal and corporate banking, asset management, and investment banking services to private, institutional, and corporate clients worldwide.
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