BankWatch: August 2025
2025 Mid-Year Market Update
Bank stocks have staged a strong recovery in 2025, with the Nasdaq Bank Index up 16.2% year-to-date and larger banks leading gains amid a “flight to quality.” Net interest margins continue to improve for most institutions, supported by a stable rate environment and expectations of further Fed cuts. M&A activity is also on the rise, with deal volume already surpassing 2024 levels by mid-year. In this month's Bank Watch newsletter, we discuss these market trends, net interest margin expansion, and what shifting interest rates could mean for bank performance and M&A activity going forward.