5 Top S&P 500 Finance Stocks Outperforming the Index in 1H25

The performance of the financial services sector was better than expected in the first half of 2025. Modest economic expansion, decent loan demand, relatively higher interest rates, increased market volatility, and continued business restructuring/expansion initiatives drove finance stocks despite lingering concerns related to uncertainty surrounding Trump’s tariff policy and the resulting expected rise in inflation in the near term.

In the January-June period, the financial services sector gained more than 7%, outperforming the S&P 500 Index’s 4.9% rise.

Given the increased use of innovative trading platforms, the adoption of artificial intelligence (AI), along with continued investments in technology and advertising, finance firms are expected to see improvements in their profitability in the long run. While such efforts may result in increased technology-related expenses in the near term, these initiatives are expected to improve operating efficiency over time.

Thus, we bring to you five top-performing stocks from the financial services sector that outperformed the broader market in the first half of this year. The stocks that you may keep in your radar are — Coinbase Global COIN, W. R. Berkley Corporation WRB, Northern Trust NTRS, Goldman Sachs GS and Charles Schwab SCHW.

NTRS currently carries a Zacks Rank #2 (Buy). The other four stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

1H25 Price Performance

5 Top Performing Financial Services Stocks

Coinbase: The largest registered cryptocurrency exchange in the United States is well-placed to capitalize on heightened crypto market volatility and rising asset prices. With 84% of its total revenues coming from the U.S. — a market increasingly viewed as a future crypto hub — the company is strategically aligned with domestic expansion.

To expand crypto’s practical use, Coinbase is investing in key infrastructure and foundational platforms like Base — a low-cost Layer 2 scaling solution. The initiative, along with its focus on stablecoins, underscores the company’s efforts to advance real-world utility for digital assets. Management envisions Coinbase to be the platform for companies that are trying to integrate cryptocurrency.

Coinbase’s emphasis on technology and development ensures that it remains aligned with fast-changing industry trends, including decentralized finance, staking, derivatives and NFTs. These initiatives help broaden revenue sources beyond transaction fees and position the crypto leader to meet evolving user demands.

From a financial standpoint, Coinbase remains fundamentally sound. The company ended the first quarter of 2025 with $10.2 billion in USD resources, consisting of cash, cash equivalents and USDC, up 6.7% from the 2024 end. Its debt burden has decreased in recent quarters, and improvements in both its debt-to-capital ratio and the times interest earned suggest a strong ability to manage and service debt.

Nonetheless, rising costs, including higher transaction and operating expenses, continue to weigh on margins. Also, Coinbase is vulnerable to fluctuations in crypto asset prices. A significant drop in the value of Bitcoin, Ethereum or other digital currencies could affect earnings, reduce the carrying value of its crypto holdings and limit future cash flows. 

Though the Zacks Consensus Estimate for the company’s earnings suggests a decline in 2025, the metric is expected to grow significantly in 2026.

W. R. Berkley: This is the largest commercial lines property casualty insurance provider that has been investing in numerous startups since 2006 and establishing new units in growing international markets. Its international business is poised for growth, supported by the emerging markets of the U.K., Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

Supported by an increase in premiums written over the past few years, WRB’s insurance business has been performing well. Business growth has been achieved on the back of several startup units in varied business lines (including healthcare, cyber security, energy and agriculture, and on growing international markets, including the Asia-Pacific region, South America and Mexico), which have provided diversification benefits. In the first quarter of 2025, net premiums written at the Insurance segment increased 10.2% year over year.

All lines of business grew in the Insurance segment, with the exception of professional liability and workers' compensation. W.R. Berkley formed Berkley Enterprise Risk Solutions to provide workers’ compensation insurance to large businesses in California. Given that pricing is firming in most business lines, this will likely lead to revenue growth.

After suffering several quarters of low investment income, the metric witnessed a compound annual growth rate (CAGR) of 10% in the period between 2015 and 2024, driven by core investment portfolio growth due to a higher book yield. A solid operating cash flow continues to drive growth in net investable assets. The metric should continue to improve as the company also invests in alternative assets, such as private equity funds and direct real estate opportunities, while benefiting from interest rate rises.

However, the company’s exposure to catastrophe losses inducing volatility in underwriting profits, and the competitive reinsurance market weighing on the Reinsurance Segment are some headwinds.

The Zacks Consensus Estimate for WRB’s 2025 and 2026 earnings suggests decent year-over-year improvements.

Northern Trust: As a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families and individuals, this custodian bank is well-positioned to leverage its organic expansion efforts. As the client base continues to expand, Northern Trust is expected to see a rebound in loan activity, particularly as its wealth management services attract more clients.

The launch of Family Office Solutions in April, targeting ultra-high-net-worth clients, provides tailored support such as investment advisory, consolidated reporting, bill pay and outsourced chief investment officer capabilities, which is expected to enhance the Wealth Management segment. This ongoing focus on this segment is expected to drive growth in the lending portfolio in the near term.

Northern Trust has taken measures to reinstate its operating leverage over the upcoming quarters. It is focused on disciplined headcount management, vendor consolidation, rationalization of its real estate footprint and process automation. Through these efforts, the company will likely improve productivity and meet its financial targets.

The ultimate measure of the success of the company’s past efforts is its ability to consistently achieve its financial target of a return on equity (ROE) between 10% and 15%. In the first quarter of 2025, it reported its third consecutive quarter of positive operating leverage and achieved an ROE of 13%, signaling progress toward sustainable profitability goals.

Yet, rising expenses are likely to hurt Northern Trust's bottom-line growth in the near term. The uncertain global financial market and weak economic conditions can affect its businesses.

The Zacks Consensus Estimate for NTRS’ 2025 and 2026 earnings suggests solid year-over-year improvements.

Goldman Sachs: The company has been a leader in providing investment banking (IB), securities, investment management and consumer banking services. It has undertaken a major business restructuring initiative to refocus on its core strengths.

In 2024, the company finalized a deal to transfer its GM credit card business to Barclays and sold GreenSky, its home-improvement lending platform, to a consortium of investors. Also, it aims to cease unsecured loan offerings to consumers through its digital consumer banking platform — Marcus.

Given its strong leadership position, wide scale of operations and exceptional talent, these efforts will likely aid top-line growth. While IB revenues declined in the first quarter of 2025 due to lower advisory fees, management expects the IB business to pick up in the second half of 2025 once the economic and geopolitical conditions stabilize.

GS’ plans to ramp up its lending services to private equity and asset managers, along with its aim to expand internationally, including Europe, the U.K. and Asia, will support its growth over the long run.

The company is establishing the Capital Solutions Group to expand and integrate its full range of financing, origination, structuring and risk management solution operations in the Global Banking & Markets business. Management expects to witness high-single-digit annual growth in private banking and lending revenues over time.

However, increasing expenses due to elevated technological costs are likely to hinder the company’s bottom-line growth. A challenging operating backdrop alongside an increasing reliance on overseas revenues remains a near-term headwind.

The Zacks Consensus Estimate for GS’ 2025 and 2026 earnings suggests a solid year-over-year improvement.

Schwab: This brokerage firm has been benefiting from the high-interest-rate environment. The company’s net interest margin (NIM) has been improving, given its focus on repaying high-cost bank supplemental funding balances.

By 2024-end, Schwab’s supplemental funding balance was down 49% from the May 2023 level, which helped NIM to increase to 2.12%. The upward momentum in NIM continued in the first quarter of 2025 as the company reduced supplemental funding 24% on a year-over-year basis.

Moreover, Schwab continues to benefit from aggressive efforts to increase its client base in advisory solutions. The company’s total managed investing solutions revenues witnessed a CAGR of 12.2% over the last five years (2019-2024).

The acquisitions of TD Ameritrade, USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC, and the buyout of Motif’s technology and intellectual property have strengthened Schwab’s position and helped diversify revenues. Despite the company lowering fees on certain investing solution products, revenues from the same increased as average client asset balances improved.

SCHW remains focused on maintaining a low-cost capital structure, which has been able to support its capital distributions. As of March 31, 2025, it had cash and cash equivalents of $35 billion and total debt (comprising long-term debt, Federal Home Loan Bank borrowings and other short-term borrowings) of $39.9 billion. It targets a common dividend payout ratio of 20-30% of GAAP earnings.

Yet, continuously rising expenses due to higher headcount and merger-related costs will likely hurt Schwab’s bottom-line growth. Also, because of the uncertainty regarding the performance of the capital markets, there is no clear evidence of robust growth in trading revenues.

The Zacks Consensus Estimate for SCHW’s 2025 and 2026 earnings suggests solid year-over-year improvements.

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This article originally published on Zacks Investment Research (zacks.com).

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