3 Bank Stocks Built for Higher Long Term Yields

Markets are being asked to rethink the old playbook as Fed Chair Kevin Warsh signals comfort with higher long term yields and less handholding on future policy moves. That mix of firmer rates, stickier inflation and rising government funding costs could reshuffle winners and losers across sectors. This article looks at three large cap US banks and life insurers from our screener that appear well exposed to this new rate regime.

The three stocks covered below are just a sample from this theme, with the full screen surfacing 34 more large cap banks and life insurers with equally compelling rate exposure stories that are not covered here. If you want to identify your own highest conviction ideas from this group, head straight into the US Large-Cap Banks & Life Insurers Benefiting from Higher Long-Term Yields screener to filter and analyze the full list.

Credicorp (BAP)

Overview: Credicorp is a Peru based financial group that offers traditional banking, lending and deposit services alongside insurance, pensions, health care and investment management across Latin America and the US. This gives it several ways to earn interest and fee income as long term rates stay firm. Its universal banking core is complemented by microfinance and digital platforms that aim to widen access to credit and payments for retail and small business customers.

Operations: Credicorp generates most of its PEN 22.8b in segment revenue from its Universal Banking arm Banco de Crédito del Perú at about PEN 15.4b. It has additional contributions from insurance and pensions at roughly PEN 2.3b, microfinance at about PEN 2.6b and investment management at about PEN 1.2b, primarily sourced in Peru at around PEN 15.0b.

Market Cap: US$30.4b

Credicorp offers a large cap, dividend focused bank that links into the higher long term yield theme through a traditional lending and deposit engine, while also leaning into digital initiatives such as Yape and broader financial inclusion. Forecast revenue and earnings growth, rising ROE targets around the low 20% area and recent gains in net interest income illustrate how higher asset yields and loan pricing can affect results. At the same time, a relatively high bad loan ratio and uneven dividend record mean credit quality and cash returns remain important considerations, especially with tighter global financial conditions and Peru specific risks. For investors seeking exposure to a rate sensitive bank that is working to reshape its earnings mix with technology and data, Credicorp may warrant closer analysis.

Credicorp’s push into digital finance and higher margin lending can reshape its earnings mix, but the real story sits in how that intersects with credit quality and capital. The 3 key rewards and 2 important warning signs hints at what might be hiding beneath the headline numbers.

Citizens Financial Group (CFG)

Overview: Citizens Financial Group is a large US regional bank that earns most of its money from traditional lending and deposit businesses, which can see net interest income and loan pricing move meaningfully when long term US yields stay higher. Through its Consumer and Commercial Banking segments it provides everything from checking accounts, mortgages and credit cards to corporate loans, treasury services and capital markets advice across a broad mix of retail customers, small businesses and larger companies.

Operations: Citizens Financial Group generates about US$6.2b of revenue from Consumer Banking and US$2.6b from Commercial Banking, with all of its US$8.2b in revenue sourced in the United States and a small offset from other items.

Market Cap: US$29.8b

Citizens Financial Group gives you a pure US play on higher long term yields, since its lending book and deposit base sit directly in the Fed’s new higher rate regime and recent commentary has highlighted how asset sensitivity feeds into net interest income. Earnings growth of 36.5% over the past year, a 24.3% net margin and a 2.6% dividend yield are part of the investment case, alongside the fact that the stock trades well below some intrinsic value estimates. At the same time, ROE of 8.1% and significant insider selling over the last three months underline that execution and risk appetite still matter. The mix of commercial real estate exposure, “Reimagine the Bank” tech investments and capital actions such as preferred redemptions and buybacks means that for Citizens the interest rate environment is only one part of a broader story.

Citizens Financial Group’s 36.5% earnings growth and 24.3% net margin suggest a story the market may not be pricing in yet. Use the analyst forecasts for Citizens Financial Group to see how those trends intersect with its recent insider selling and capital moves.

Resona Holdings (TSE:8308)

Overview: Resona Holdings is a Tokyo based banking group that focuses on deposits, lending and fee based services for individual and corporate customers in Japan. This ties its earnings closely to interest spreads and asset yields as long term rates move. It acts as a partial non US proxy for higher rate themes through retail and commercial banking, complemented by trust, real estate and market services.

Operations: Resona Holdings generates most of its revenue in Japan, with around ¥452,392 million from Personal Banking and ¥511,483 million from Corporate Banking, offset by a loss in Market Trading and a small contribution from Others.

Market Cap: ¥5.70 trillion

Resona Holdings provides exposure to a large Japanese retail and corporate bank that has been operating in a world of higher rates, with management explicitly focusing on net interest income as yields change and using a sizeable buyback plan to support returns per share. The bank links directly to the higher long term yield theme because its loan and deposit book, plus market activities, are sensitive to rate moves. At the same time, its relatively low allowance for bad loans and ongoing cost pressures mean credit quality and expense control remain key swing factors. For investors interested in how a world with higher interest rates could influence both earnings power and shareholder payouts, this is a story that may warrant closer monitoring.

Resona Holdings is leaning into higher rates, yet its low allowance for bad loans and cost pressures may be masking the real story. The analysis report for Resona Holdings could reveal how that balance really plays out.

Seeking Alternatives Beyond Big Banks?

Fresh ideas can move fast when momentum builds and prices start flying. Spot potential breakouts while they are still under the radar for now and act now.

• Target reliable income streams by scanning a curated set of companies in the 11 dividend fortresses before yields get caught dropping as markets reprice expectations.
• Hunt for overlooked compounders with solid cash generation using the 47 high quality undervalued stocks, where the valuation gap and quality signal still matter most.
• Pounce on future facing infrastructure plays with the 55 AI infrastructure stocks before wider attention shifts momentum and tight entry points start slipping away.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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