Strong momentum heading into 2026: Bank stocks posted strong gains in 2025, driven by increased M&A activity and a more accommodative Federal Reserve, setting a positive backdrop for 2026.

Tailwinds remain in place: Advisors point to continued dealmaking, potential Fed rate cuts, and a steeper yield curve as key factors supporting bank profitability and lending margins.

Not without risks: Concerns include possible credit stress, weakness in the labor market, and valuations that already reflect much of the good news.

Opportunities beyond mega banks: Some investors believe regional banks, small-cap financials, and wealth-management-focused firms could outperform larger banks in 2026.