European banks delivered their best performance in 2025, and investors have been tempted to take profits as the sector bounces back. But this rally is not a bubble, and there is plenty of evidence that international bank stocks are still undervalued relative to domestic peers.
European banks continue to average single-digit multiples while posting double-digit revenue growth, making the sector attractive amid volatile asset conditions. But some stocks in the industry stand out more than others, and a diversified investment in this space will allow investors to capture various bullish elements.
Despite Commodity Headwinds, European Banks Are Still Selling
European banking is still emerging as a neglected industry after a decade of negative ratings. The previous rate hike crushed banks' borders, pushing the European banking industry into a deep recession, which was further exacerbated by the war-induced asset shock. But now the oil storms are changing, and European banks are benefiting from the Goldilocks situation. And when markets are neither too hot nor too cold, investors tend to reap the rewards.
Europe's financial revolution is not just about oil, prices, and vibes; the sector has the most available metrics that show that certain stocks remain undervalued. Some of these metrics include:
-
Common Equity Tier 1 (CET1) Ratio – A metric used to measure the health of a bank by comparing its capital to its weighted assets. The Goldilocks range is chosen for this metric: too high means the money is unproductive, too low means the bank is taking too much risk.
-
Return on Tangible Equity (ROTE) – Releases factors such as fixed assets and product value to determine the return on equity invested by shareholders and is generally considered the metric that best measures the pure performance of a bank's capital.
-
Dividend Payout Ratio (DPR) – The percentage of a company's profits returned to shareholders as dividends. DPR is useful in assessing a bank's financial health, as budget cuts often hurt its outlook.
Banco Bilbao: The Profit Machine Keeps Changing
Banco Bilbao Viscaya Argentaria Today
Banco Bilbao Viscaya Argentaria
- 52 week interval
- $14.63
▼
$26.20
- Dividend Yield
- 4.66%
- The P/E ratio
- 11.65
Banco Bilbao Viscaya Argentaria NYSE: BBVA is one of the most efficient international banks in the Eurozone, due to its growth in emerging markets. The bank reported a ROTE of 21.7% and a CET1 of over 12% in Q1 2026, but trades at around 10.3 times forward earnings. The dividend pays 4.63% with a DPR of 54.3%, but the company is buying shares heavily, and interest income is up more than 20% year-over-year (YOY).
BBVA shares fell sharply and have now resumed their upward momentum. The stock price continues to make higher lows, and the momentum indicators have confirmed the upside. The Relative Strength Index (RSI) is above 50, a commonly recognized threshold, and the Moving Average Convergence Divergence (MACD) has been trending higher since mid-May. BBVA's technological advancements match its core strengths, which is why it ranks high on today's list.
Santander: The Capital Compounder Has Not Been Started Much
Banco Santander Today
Banco Santander
- 52 week interval
- $8.05
▼
$13.78
- Dividend Yield
- 1.57%
- The P/E ratio
- 11.09
Company Banco Santander SA NYSE: SAN has risen nearly 65% in the past 12 months, but the Iran war briefly thwarted its attempt to reach the top. However, Santander maintains a very good 15% ROTE with a CET1 of 14%, and its banking offerings are more global than BBVA. The stock is not as profitable as it has been in recent months, but the 1.57% dividend is worth about 17% DPR and the stock trades at just 11 times earnings.
SAN shares challenged the 200-day moving average earlier this year, but the bullish rally proved strong enough to weather the storm. The stock price quickly fell back above its 50-day moving average, a move supported by the RSI's rise in bullish territory. A recent attempt to retest the 50-day was quickly rejected (and blocked by the RSI), so SAN shares were cleared by it to make higher prices.
ING Group: High Risk Package with Income and Value
ING Group Today
- 52 week interval
- $21.41
▼
$32.22
- Dividend Yield
- 4.69%
- The P/E ratio
- 12.30
Amsterdam-based company ING Group NV NYSE: ING it looks affordable at 11 times earnings, but 16% CET1 and 57% DPR make it the bank with the most unique risk profile on our list. However, the 4.7% yield is hard to ignore as the bank's stock trades at about 11.4 times forward earnings, and management raised net interest income (NII) guidance in the last earnings report.
The RSI has been a guiding light during volatile periods, guiding investors to profit as the underlying stock price fluctuates. Despite June's brief dip, the reliable sentiment index remains above 50, indicating that consumers have not yet relented. The 50-day moving average remains an active level of support, expressing even better sentiment as the stock makes new all-time highs.
Before you consider Banco Bilbao Viscaya Argentaria, you'll want to hear this.
MarketBeat tracks Wall Street's top and most effective research analysts and the stocks they recommend to their clients every day. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Banco Bilbao Viscaya Argentaria was not on the list.
Although Banco Bilbao Viscaya Argentaria currently has a hold rating among analysts, top analysts believe these five stocks are the best.
View Five Stocks Here
MarketBeat recently released its list of the 7 hottest IPOs expected to hit Wall Street in 2026. See which companies are preparing to go public and why investors are watching closely.
Get This Free Report
