Finance stocks, in general, and bank stocks, in particular, are not the most exciting investments. But in the last two years, they’ve been mostly dreadful. In 2023, higher interest rates caused several small banks to collapse. For much of 2024, a cloud of regulation, known as Basil III Endgame, hung over the industry and weighed down many stocks that were already struggling with a tough lending environment.
But there are signs that 2025 will be a better year for banks. While that bodes well for a blue-chip name like JPMorgan Chase & Co. (NYSE: JPM), value-seeking investors may be better off looking to the regional banks for stocks that may outperform the broader market. These banks would have a difficult time efficiently meeting the capital requirements and liquidity standards brought on by Basil III. That's why a more relaxed standard may make regional banks more attractive.
