Banks benefitted a great deal from Donald Trump’s election. Expectations surged that Trump would bring about changes that would help them, including higher rates and deregulation. However, that picture has blurred of late as Republicans have been slow to push through changes. Banks may be a good buy no matter what though, as three main aspects will support them. Firstly, gradual rates increases—which seem likely—will benefit them. Secondly, their thick capital cushions, and finally, some very modest regulatory reforms, which do not seem too politically complicated. All three could mean that banks will see a strong performance to come.
FINSUM: Banks may see a strong fundamental performance, but their valuations are still too high if there are no major changes, at least in our opinion.
Source: Wall Street Journal