Three reasons why banks may be compelling now

The financial sector has been one of the leading contributors to S&P 500 returns this year. Within it, banks may be a compelling opportunity.  Bank CEOs highlighted three recurring themes in their first quarter earnings reports.

One, bank earnings have generally been strong in 2025, with the four largest US banks reporting a combined earnings increase of 10.8% in the first quarter.¹ This growth was fueled by stronger-than-expected net interest income and solid revenue performance in both stock and fixed income markets.

Two, AI remains a major area of investment, with many CEOs emphasizing its role in enhancing efficiency, fostering innovation, and improving customer engagement. Chatbots and virtual assistants are elevating the customer experience, while automation of routine tasks is reducing costs and boosting operational efficiency. AI is also strengthening risk management by improving the detection and prevention of fraudulent activities and enhancing security.

Three, optimism in the banking sector has also been buoyed by regulatory developments. Recent deregulation gives banks greater flexibility to innovate and expand. These changes enabled banks to streamline operations, lower compliance costs, and reallocate resources toward technology and strategic initiatives. A more favorable regulatory environment is also encouraging mergers and acquisitions, helping banks strengthen their market positions and broaden service offerings. Deregulation is also opening new markets and supporting portfolio diversification, further driving growth and profitability. This shift is seen as a catalyst for increased competition and innovation, ultimately benefiting consumers through improved products and services.

For exposure to the banking theme, consider KBWB, Invesco KBW Bank ETF. Learn more about it and get other related ETF insights below this video.

Important information 

1 Source: Trepp, “Bank Earnings Review – Q1 2025: Earnings Beat Expectations Driven by Interest Income & Trading, on the Eve of Liberation Day,” April 22, 2025.

Not a Deposit    Not FDIC Insured    Not Guaranteed by the Bank    May Lose Value    Not Insured by any Federal Government Agency

Past performance is not a guarantee of future results. An investment cannot be made into an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The opinions expressed are those of Invesco, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply.

The Fund's return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.

The Fund is non-diversified and may experience greater volatility than a more diversified investment.

Investments focused in a particular industry, such as banking, are subject to greater risk and are more greatly impacted by market volatility, than more diversified investments.

Shares are not individually redeemable, and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 75,000, 80,000, 100,000, or 150,000 Shares.

Invesco Distributors, Inc.              5/25                  NA4538104