Big banks will be winners under President Donald Trump’s second term as he ramps up deregulation, according to Wells Fargo analyst Mike Mayo. In addition to more lax regulatory measures under the new administration, Mayo thinks improved government efficiency and the “revolution of common sense” — as Trump stated in his inauguration speech — marks a shift toward more business-friendly oversight. These changes add up to a “triple benefit” for large-cap bank stocks, he added. “The start of a new bank era is now,” Mayo wrote in a note on Monday. “A new era with more free-markets and re-regulation should aid revenues, returns and the ability of banks to intermediate.” Mayo thinks the new regulatory changes will aid money center banks, and in particular, Citi , his top choice in the sector. Scott Bessent, Trump’s nominee for Treasury secretary, has emphasized regulatory overhaul to “encourage more lending and reinvigorate banks,” the analyst said. Mayo forecasts that each 1% rise in loan growth would result in a roughly 1% boost in earnings for banks. “Higher capital and lower reg costs could lead to lower lending hurdle rates that, in turn, could aid banks incrementally vs. nonbanks,” Mayo said. —CNBC’s Michael Bloom contributed to this report.
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