3 Financial Stocks With Earnings Tied Closely To Higher Interest Rates

With the U.S. 10 year Treasury yield hovering near 4.8% and global rates climbing, the cost of money is back at centre stage. That shift is reshaping how investors think about risk, income and valuation. Higher yields can pressure some stocks, yet they can also open the door for others. This article unpacks the backdrop and then walks through three stocks from our Global Financials Benefiting from Higher Interest Rates screener that appear particularly exposed to these interest rate moves.

The stocks that follow are just a small sample, and the full screen surfaced 63 more companies with equally compelling narratives that are not covered here. To identify, compare and analyze the highest conviction ideas for your watchlist, head straight to the Global Financials Benefiting from Higher Interest Rates screener.

Burke & Herbert Financial Services (BHRB)

Overview: Burke & Herbert Financial Services is a long established Alexandria based community bank that provides everyday banking, lending and wealth services to households and businesses, with earnings closely tied to movements in benchmark interest rates through its net interest income.

Operations: Burke & Herbert generates about US$360 million in revenue from its Community Banking segment, all from customers in the United States.

Market Cap: US$1.43b

Investors looking at beneficiaries of higher rates may consider Burke & Herbert Financial Services, since its community banking model means net interest income is directly exposed to movements in the U.S. 10 year yield and Fed policy. Recent results show that while net interest income has risen in the higher rate setting, net income has been under pressure, which raises questions about loan pricing, funding costs and credit charges. The bank combines this rate sensitivity with a 3.05% dividend yield and forecasts that indicate earnings and revenue growth potential. At the same time, a large one off loss, shareholder dilution and a relatively modest 8.1% ROE underline the need to look carefully at balance sheet strength and reserve levels before deciding how it fits into a portfolio.

Burke & Herbert Financial Services sits at the crossroads of higher rate exposure, dividend income, and a recent one off loss that many investors may be glossing over. Get the fuller story on profitability pressure, balance sheet resilience, and where net interest income could surprise next in the 3 key rewards and 3 important warning signs (1 is major!)

Palomar Holdings (PLMR)

Overview: Palomar Holdings is a La Jolla based specialty property and casualty insurer that focuses on niche products such as residential and commercial earthquake, Hawaii hurricane, inland marine, flood and crop cover, using technology driven underwriting to serve individuals and businesses across the United States. In a period of higher interest rates, Palomar’s insurance float and reserves give it scope to earn more on its investment portfolio, which can support earnings alongside premium growth in specialty lines.

Operations: Palomar generates about US$1.1 billion in revenue from its Property and Casualty Insurance Business, all from customers in the United States.

Market Cap: US$3.5b

Palomar Holdings is one to watch if you are looking for an insurer that can potentially turn higher rates into stronger investment income while still leaning on underwriting discipline. Forecast earnings growth of about 12% a year, a high current ROE near 21% and raised 2026 guidance all point to a business that has been building on specialty niches like crop and casualty, backed by its own technology platform. The flip side is meaningful catastrophe exposure, reliance on reinsurance economics and recent insider selling, which could matter if severe events hit or capital markets tighten. The real question is how those moving pieces stack up once you look at Palomar’s pricing power, reinsurance program and valuation together.

Palomar’s rapid earnings outlook and high ROE suggest that the real story lies in how its specialty focus and reinsurance program interact with higher rates. Get the full context in the analyst forecasts for Palomar Holdings

Ninety One Group (LSE:N91)

Overview: Ninety One Group is an independent global asset manager that runs investment strategies for pension funds, insurers, sovereign wealth funds, wealth managers and retail platforms, with a strong focus on fixed income and risk management products that can see increased client interest when yields are higher and markets are more volatile. Headquartered in Cape Town with offices across Africa and other regions, Ninety One Group manages money across public and private markets for clients looking to balance growth and capital preservation.

Operations: Ninety One Group generates about £650 million in revenue from its Investment Management Business, with around £201 million from South Africa, £461 million from the United Kingdom and £102 million from the rest of the world.

Market Cap: £2.0 billion

Ninety One Group is worth a closer look if you think higher global rates and choppy bond markets will keep demand strong for active fixed income and risk management. The company already earns high margins, with net income of £153.5 million on £650.2 million of revenue in the year to March 2026, and analysts expect both revenue and earnings to grow while ROE trends higher. Yet you also need to weigh pressure on active fees, past net outflows and an unstable dividend record, as well as optimism around the Sanlam partnership and cost savings. The key question is whether Ninety One’s capital light model and emerging market reach can turn that higher rate backdrop into sustained fee income and shareholder returns.

Ninety One Group’s capital light model and emerging market reach could be masking a very different earnings story once you factor in rates, flows and fees together. See how those pieces fit in the analysis report for Ninety One Group

Seeking Alternatives Before The Crowd?

Some stocks are already building quiet momentum while others could be dropping out of focus. Fresh opportunities rarely stay under the radar for long, so consider acting before interest broadens.

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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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