Goldman Sachs Bank Stocks: Top 10 Stock Picks

Published August 13, 2023 at 8:52 am EDT Updated September 7, 2026 at 12:01 pm EDT

In this article, we discuss the top 10 bank stocks in the Goldman Sachs portfolio.

Fitch Ratings forecasts that the strength of banking assets in several markets will decline compared to their robust historical performance. Business activities are likely to remain slow, given the inflation and interest rate pressures. However, the potentially positive impact of higher interest rates on net interest margins could partially counterbalance these factors. In some markets, particularly in the United States, stricter financial policies contribute to challenges related to deposit balances, shifts in deposit accounts, and increased deposit betas. Consequently, net interest margins have already reached their highest point or will do so soon, which hinders potential gains. Fitch Ratings provided a ‘deteriorating’ sector outlook to banking industries at the beginning of this year, particularly the United States, Canada, and some regions in Western Europe. Australian banks were assigned a ‘deteriorating’ outlook as well, while Hong Kong banks were allocated an ‘improving’ rating.

Following the March 2023 banking crisis, the International Monetary Fund trimmed its estimates for the worldwide economy, citing “the recent increase in financial market volatility.” The IMF also revised its forecasts for economic expansion. It first expected a 3.4% growth in 2022, and now the growth estimate stands at 2.8% in 2023. IMF’s latest report said:

“Uncertainty is high, and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled.”

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Rising interest rates will elevate losses on securities held by banks and encourage savers to withdraw funds from their accounts, putting pressure on the primary way banks generate profits. Losses related to commercial real estate and other loans have only just started to become prominent for banks, further diminishing their financial performance. Following the collapse of Silicon Valley Bank, regulatory focus will shift towards medium-sized banks due to potential supervisory oversights. According to CNBC, many of America’s 4,672 banks will find themselves merging with stronger counterparts in the coming years, propelled either by market dynamics or regulatory policies. This forecast is based on insights from a dozen executives, advisors, and investment bankers surveyed by CNBC. A recent example is JPMorgan’s acquisition of First Republic for $10.6 billion.

Also Read: 15 Worst Performing Bank Stocks in 2023

On August 8, Moody’s downgraded the credit ratings of numerous small and medium-sized U.S. banks, while also placing several prominent banks under scrutiny for potential negative revisions. Major financial entities such as Bank of New York Mellon, U.S. Bancorp, State Street, Truist Financial, Cullen/Frost Bankers, and Northern Trust are currently undergoing assessment for a potential downgrade. Moody’s analysts Jill Cetina and Ana Arsov commented in a research note:

“U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets. Meanwhile, many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital. This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline from solid but unsustainable levels, with particular risks in some banks’ commercial real estate (CRE) portfolios.”

Amid the gloomy outlook for the banking industry, we take a look at Goldman Sachs’ Q1 2023 portfolio for the firm’s top bank stock picks. These include JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and American Express Company (NYSE:AXP).

Our Methodology

We used Goldman Sachs’ Q1 2023 portfolio and selected the 10 biggest positions in banks during the quarter for this list. We have mentioned Goldman Sachs’ stake value and the hedge fund sentiment towards each stock as of the first quarter of 2023. The list is ranked in the ascending order of the firm’s stake value in each holding.

Goldman Sachs Bank Stocks: Top 10 Stock Picks

Photo by Mikel Parera on Unsplash

Goldman Sachs Bank Stocks: Top Stock Picks

10. The Charles Schwab Corporation (NYSE:SCHW)

Goldman Sachs’ Stake Value: $385,780,864

Number of Hedge Fund Holders: 87

The Charles Schwab Corporation (NYSE:SCHW) is a holding company in the savings and loan sector. Its range of services include wealth management, securities brokerage, banking, asset management, custody, and financial advisory. In Q1 2023, Goldman Sachs owned 7.3 million shares of The Charles Schwab Corporation, worth $385.78 million.

On July 28, The Charles Schwab Corporation declared a $0.25 per share quarterly dividend, in line with previous. The dividend is distributable on August 25, to shareholders of record on August 11. For the third consecutive quarter, the company has declared a dividend of $0.25 per share.

According to Insider Monkey’s first quarter database, 87 hedge funds were bullish on The Charles Schwab Corporation, compared to 74 funds in the prior quarter. D E Shaw is the leading stakeholder of the company, with 12.2 million shares worth $642.7 million.

In addition to JPMorgan Chase & Co., Bank of America Corporation, and American Express Company, The Charles Schwab Corporation is one of the top Goldman Sachs bank stocks.

Broyhill Asset Management made the following comment about The Charles Schwab Corporation in its second quarter 2023 investor letter:

“After the failure of Silicon Valley Bank (SVB), the market turned a critical eye to the financial sector. Institutional investors sharpened their forensic accounting pencils and hypothesized, “What would happen to The Charles Schwab Corporation should its depositors take their money and run?” While this is a helpful exercise, we believe the probability of a run on Schwab Bank is low. Schwab is not SVB. Its deposit base is sticky and fragmented; Silicon Valley’s was not. Less than 10% of SVB’s deposit base was under the FDIC insurance limit, and its core customers were rate-sensitive startups and venture capitalists with fickle cash needs. In contrast, ~80% of Schwab’s deposit base is under the FDIC’s limit and spread across millions of brokerage accounts that keep cash on hand for investment. Rather than spending our time replicating doomsday scenarios, we began by estimating the risk to Schwab’s earnings power should it need to raise the rate paid on deposits in line with competitors. Even under this scenario, we believe our downside is limited. Longer term, we believe Schwab has multiple levers it can pull to monetize the ~ $7 trillion in assets trusted in its custody.”

9. Itaú Unibanco Holding S.A. (NYSE:ITUB)

Goldman Sachs’ Stake Value: $450,759,440

Number of Hedge Fund Holders: 17

Itaú Unibanco Holding S.A. (NYSE:ITUB) provides a range of financial services and products to both individual and business entities in Brazil and internationally. The company’s operations are divided into three segments – Retail Banking, Wholesale Banking, and Market + Corporation Activities. Itaú Unibanco Holding S.A. is one of the top Goldman Sachs bank stocks. In Q1 2023, Goldman Sachs held a $450.7 million stake in the company.

On August 8, Itaú Unibanco Holding S.A. reported Q2 GAAP earnings per share of R$0.87, beating Wall Street estimates by R$0.70. Revenue for the quarter increased 10.2% year-over-year to R$38.83 billion.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Itaú Unibanco Holding S.A., compared to 18 funds in the prior quarter. Rajiv Jain’s GQG Partners held a prominent stake in the company, with 16.10 million shares worth $78.4 million.

Ariel Global Strategy made the following comment about Itaú Unibanco Holding S.A. in its Q4 2022 investor letter:

“We initiated two new positions in the quarter. Macro-uncertainty also presented us with an opportunity to buy shares of Brazilian financial services company, Itaú Unibanco Holding S.A.. The company is led by a dynamic CEO, who is utilizing technology in the private banking sector as part of a broader move towards digitization. This strategy is not only reducing distribution costs, but is enabling the creation of new products in high market share areas such as private banking, credit cards, as well as small- and medium-size business lending. An attractive valuation, strong net interest margins and high return on equity are among the attributes motivating our purchase of shares.”

8. Northern Trust Corporation (NASDAQ:NTRS)

Goldman Sachs’ Stake Value: $450,783,455

Number of Hedge Fund Holders: 25

Northern Trust Corporation (NASDAQ:NTRS) is one of the top Goldman Sachs bank stocks on our list. Northern Trust Corporation is a financial services company that provides global wealth management, asset servicing, banking solutions, and asset management services to individuals, families, institutions, and businesses worldwide. As of Q1 2023, Goldman Sachs holds a $450.7 million stake in Northern Trust Corporation.

On July 19, Northern Trust Corporation declared a $0.75 per share quarterly dividend, in line with previous. The dividend is payable on October 1, to shareholders of record on September 8.

According to Insider Monkey’s first quarter database, 25 hedge funds held stakes worth $454.6 million in Northern Trust Corporation. John W. Rogers’ Ariel Investments is a prominent position holder in the company, with 2.3 million shares worth $209.2 million.

7. Wells Fargo & Company (NYSE:WFC)

Goldman Sachs’ Stake Value: $478,141,649

Number of Hedge Fund Holders: 78

Wells Fargo & Company is a financial services firm that offers a range of products and services including banking, investment, mortgage, as well as consumer and commercial financing worldwide. Securities filings for Q1 2023 reveal that Goldman Sachs owned nearly 12.8 million shares of Wells Fargo & Company worth $478.14 million, representing 0.1% of the total securities.

On July 25, Wells Fargo & Company declared a $0.35 per share quarterly dividend, a 16.7% increase from its prior dividend of $0.30. The dividend is payable on September 1, to shareholders of record on August 4. The board of directors at Wells Fargo also approved a new program for repurchasing common stock, with a maximum value of $30 billion.

According to Insider Monkey’s first quarter database, 78 hedge funds were bullish on Wells Fargo & Company, compared to 87 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is a significant position holder in the company, with a stake worth nearly $934 million.

Here is what Tweedy, Browne has to say about Wells Fargo & Company in its Q1 2023 investor letter:

“The Funds received very little in the way of return contributions from many of their financial, energy, media, and healthcare holdings. While it would appear that a crisis was avoided by the quick intervention of bank regulators in the US and Switzerland, some uneasiness still remains in the global banking community. This turmoil couldn’t help but have a negative impact on investor sentiment and in turn on Fund bank holdings such as Wells Fargo.”

6. Citigroup Inc. (NYSE:C)

Goldman Sachs’ Stake Value: $487,243,596

Number of Hedge Fund Holders: 79

Citigroup Inc. (NYSE:C) is a diversified multinational financial services holding company that specializes in foreign exchange, prime brokerage, corporate lending, investment banking and advisory, private banking, cash management, trade finance, and securities services. In the first quarter of 2023, Goldman Sachs held a $487.2 million stake in Citigroup Inc..

On July 25, Citigroup Inc. declared a $0.53 per share quarterly dividend, a 3.9% increase from its prior dividend of $0.51. The dividend is payable on August 25, to shareholders of record on August 7.

According to Insider Monkey’s first quarter database, 79 hedge funds were bullish on Citigroup Inc., compared to 81 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder in the company, with 55.2 million shares worth $2.59 billion.

Citigroup Inc. is one of the top Goldman Sachs bank stocks, just like JPMorgan Chase & Co., Bank of America Corporation, and American Express Company.

Here is what Diamond Hill Long-Short Fund has to say about Citigroup Inc. in its Q1 2022 investor letter:

“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”

5. American Express Company (NYSE:AXP)

Goldman Sachs’ Stake Value: $594,833,757

Number of Hedge Fund Holders: 77

American Express Company provides credit cards, banking, and travel-related services worldwide. It is one of the top Goldman Sachs bank stocks. In the first quarter of 2023, Goldman Sachs held 3.60 million shares of American Express Company worth $594.8 million, representing 0.12% of the total portfolio.

On July 21, American Express Company reported Q2 GAAP earnings per share of $2.89, beating market estimates by $0.08. However, the revenue increased 12.3% year-over-year to $15.05 billion, yet fell short of Wall Street consensus by $310 million.

According to Insider Monkey’s first quarter database, Warren Buffett’s Berkshire Hathaway held the largest stake in the company, with 151.6 million shares worth $25 billion. Overall, 77 hedge funds were long American Express Company during the March quarter.

ClearBridge Large Cap Value Strategy made the following comment about American Express Company in its first quarter 2023 investor letter:

“Other financial holdings were among the top contributors, such as American Express Company, whose business is less sensitive to changes in the yield curve than most financials, and Progressive, which has minimal interest rate mismatch exposure.”

4. UBS Group AG (NYSE:UBS)

Goldman Sachs’ Stake Value: $804,369,971

Number of Hedge Fund Holders: 30

UBS Group AG (NYSE:UBS) is next on our list of the top Goldman Sachs bank stocks. UBS Group AG was founded in 1862 and is based in Zurich, Switzerland. The company operates through four segments – Global Wealth Management, Personal & Corporate Banking, Asset Management, and Investment Bank. At the end of Q1 2023, Goldman Sachs held 37.7 million shares of UBS Group AG worth $804.3 million.

On August 11, UBS Group AG stock price increased by 4.9% as the bank chose to end a CHF 9 billion ($10.3 billion) loss protection guarantee provided by the Swiss government. This guarantee was initially offered as part of the government-mediated acquisition of Credit Suisse. UBS Group AG reviewed its assets following the completion of the Credit Suisse takeover and concluded that the loss protection guarantee and a CHF 100 billion ($114.1 billion) public liquidity backstop were no longer needed. All loans had been repaid by Credit Suisse.

According to Insider Monkey’s first quarter database, UBS Group AG was part of 30 hedge fund portfolios, up from 16 in the prior quarter. Richard S. Pzena’s Pzena Investment Management held a prominent stake in the company, comprising 3.78 million shares worth $80.85 million.

Bronte Amalthea Fund made the following comment about UBS Group AG in its first quarter 2023 investor letter:

“The biggest thing that happened in markets in the quarter was the collapse of three banks:—Credit Suisse, Silicon Valley Bank and Signature Bank. We have held short positions in each of these banks, but we traded them poorly and profits were smaller than they could have been.

We have also purchased the successor banks for two of them. We initiated positions in UBS Group AG, which has purchased Credit Suisse under advantageous terms, and First Citizens Bank, which purchased much of Silicon Valley Bank on even more advantageous terms.

We will go through each of these banks in turn as they are (a) interesting in their own right and (b) have resulted in some changes in our portfolio.

Swiss banks were sharply weakened by the end of banking secrecy. Historically, Switzerland was a clean place to hide your dirty money and Swiss Banking was almost synonymous with tax avoidance.…” (Click here to read the full text)

3. Morgan Stanley (NYSE:MS)

Goldman Sachs’ Stake Value: $841,230,763

Number of Hedge Fund Holders: 51

Morgan Stanley (NYSE:MS) is one of the top Goldman Sachs bank stocks. In the first quarter of 2023, Goldman Sachs owned 9.58 million shares of Morgan Stanley worth $841.2 million, representing 0.17% of the total portfolio.

On July 18, Morgan Stanley declared a $0.85 per share quarterly dividend, a 9.7% increase from its prior dividend of $0.78. The dividend is payable on August 15, to shareholders of record on July 31.

According to Insider Monkey’s first quarter database, Morgan Stanley was part of 51 hedge fund portfolios, compared to 55 in the prior quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder of the company, with 5.4 million shares worth $477.5 million.

Here is what Madison Dividend Income Fund has to say about Morgan Stanley in its Q3 2022 investor letter:

“This quarter we are highlighting Morgan Stanley as a relative yield example in the Financial sector. MS is a leading investment bank and wealth management firm with approximately $5 trillion of client assets under management. It merged Citigroup’s Smith Barney business into its own wealth management business after the 2008 recession/financial crisis, which resulted in a more stable business model. Recent acquisitions of asset manager Eaton Vance and E-Trade provide additional stability and higher returns on capital. We believe MS has a sustainable competitive advantage due to its size and scale, global reach, strong reputation, and financial distribution capabilities. Importantly for a financial institution, it is in good financial health as key leverage ratios including common equity Tier 1 ratio, Tier 1 capital ratio, Tier 1 leverage ratio, and supplementary leverage ratio were all well above required minimums at the end of 2021.

Our thesis on MS is that its wealth management business will continue to become a larger part of the overall company, which will increase overall margins and return on equity (ROE). Wealth management and asset management are less cyclical than investment banking, and often generate higher margins and provide better stability of financial results. For example, the addition of Smith Barney added significant scale and boosted wealth management operating margins from below 10% into the mid-20%s over the past several years while also increasing returns on equity. Looking ahead, we believe the company will benefit from rising asset prices and higher interest rates, should they happen over time…” (Click here to see the full text)

2. Bank of America Corporation (NYSE:BAC)

Goldman Sachs’ Stake Value: $944,620,987

Number of Hedge Fund Holders: 91

Bank of America Corporation is one of the top bank stocks from the Goldman Sachs portfolio. Securities filings for Q1 2023 reveal that Goldman Sachs held 33 million shares of Bank of America Corporation worth $944.60 million, representing 0.20% of the total holdings.

On July 29, Bank of America Corporation declared a $0.24 per share quarterly dividend, a 9.1% increase from its prior dividend of $0.22. The dividend is payable on September 29, to shareholders of record on September 1.

According to Insider Monkey’s first quarter database, Bank of America Corporation was part of 91 hedge fund portfolios, compared to 100 in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 1.03 million shares valued at $29.5 billion.

ClearBridge Large Cap Value Strategy made the following comment about Bank of America Corporation in its first quarter 2023 investor letter:

“Our quality bias has always led us to gravitate toward banks with strong and diverse deposit bases; those we own tend to be the larger players, which we also expect to be the biggest beneficiaries from a flight to safety in terms of deposits. JPMorgan Chase comes to mind especially here, but so does Bank of America Corporation despite its weakness in March, as well as U.S. Bancorp, to which we added opportunistically in the quarter.”

1. JPMorgan Chase & Co. (NYSE:JPM)

Goldman Sachs’ Stake Value: $2,365,161,089

Number of Hedge Fund Holders: 112

JPMorgan Chase & Co. is the biggest bank stock in the Goldman Sachs portfolio. Goldman Sachs, as of the first quarter of 2023, owned 18.15 million shares of JPMorgan Chase & Co. worth $2.3 billion, representing 0.5% of the total holdings.

On July 14, JPMorgan Chase & Co. reported a Q2 non-GAAP EPS of $4.37 and a revenue of $41.3 billion, outperforming Wall Street estimates by $0.61 and $2.45 billion, respectively.

According to Insider Monkey’s Q1 data, 112 hedge funds were long JPMorgan Chase & Co., compared to 100 funds in the last quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 5.3 million shares worth nearly $697 million.

Manole Capital Management made the following comment about JPMorgan Chase & Co. in its second quarter 2023 investor letter:

“It will be interesting to see what kind of policy decisions are made around regulation for institutions that are between $100 billion of assets and $700 billion of assets. As JPMorgan Chase & Co.’s purchase of First Republic shows, scale is a competitive advantage. It now has 13% of total US deposits and it manages 21% of America’s credit card spending. With additional regulatory burdens coming, banks are facing a profitability headwind and 100 to 300 basis points of possible ROE erosion.

The banking sector is facing a slow-moving crisis, but we aren’t sure it is enough to sink the overall health of the US consumer or economy. Credit will contract and lending standards will continue to rise. However, we do not see this problem escalating to the size and scale of previous banking crises.

Jamie Dimon, Chairman and CEO of JP Morgan Chase clearly sees the risks these FINTECH companies present. In his annual letter to shareholders, he stated that all incumbent banks should be “scared shitless” of these FINTECH rivals. Not only is his bank being attacked from multiple angles, but Apple just launched a cash management program with Goldman Sachs. On the first day of Apple’s savings program, it raised $400 million and eclipsed $1 billion in its first four days. Dimon specifically labeled Apple a bank the other day in an interview when he said, “It may not have insured deposits, but it’s a bank. If you move money, hold money, manage money, lend money — that’s a bank.”

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