Bank of America makes bold call on bank stocks
View original at finance.yahoo.comBank of America makes bold call on bank stocks Bank of America Securities starts 2026 with a strong message: Bank stocks can beat the S&P 500 again…
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Focus on GSIBs with significant capital markets business; only buy regionals that can show growth and operating leverage
80% confidenceCitigroup EPS will expand by around 25% on average each year from FY26 to FY27
80% confidenceCurrent conditions are more similar to the late 1990s and early 2000s than post-global financial crisis period
80% confidenceCitigroup has the best risk/reward among large-cap banks
80% confidenceWells Fargo ROTCE will reach about 17% by 2027, rising toward 18% in 2028
80% confidenceRate stability is more crucial than cuts; positively sloped yield curve and lower rate volatility improve net interest margins
80% confidenceWells Fargo stocks could perform better in second half of 2026 versus first half
80% confidenceWells Fargo removal of asset cap allows pursuit of better growth and higher productivity, leading to eventual re-rating
80% confidenceMorgan Stanley is hard to replicate due to strong U.S. wealth business and global capital markets platform
80% confidenceExpects strong M&A and IPO activity due to strategic investor and sponsor interest and smooth approval process
80% confidenceMorgan Stanley ROTCE could rise into the low to mid-20s over time if synergies and capital deployment succeed
80% confidenceCitigroup ROTCE will improve by about 300 bps from 2025 to 2027, with path toward low-teens ROTCE long-term
80% confidenceExpects additional bank mergers and acquisitions, especially regional banks seeking growth and deposits
80% confidenceBank stock outperformance is part of a multi-year run driven by deregulation, better capital-markets cycle, rising domestic capex, and stable credit quality
80% confidenceWithout a recession, BofA doesn't expect a huge credit cycle or much improvement in credit quality
80% confidenceGoldman Sachs EPS growth will accelerate to about 19% for FY26 compared to about 14% for FY25
80% confidenceBank stocks can beat the S&P 500 again in 2026
80% confidenceAI won't have a big effect on bank profits in 2026, though it may become a more expensive long-term driver
80% confidence