Wells Fargo analyst Mike Mayo says big banks will be the winners in President Donald Trump’s second term as he ramps up deregulation. In addition to the new administration’s looser regulatory approach, Mayo also believes that increased government efficiency and a “revolution of common sense” – as Trump called it in his inauguration speech – mark a move toward more business-friendly regulation. transformation. The changes are a “triple benefit” for large bank stocks, he added. “The new banking era has now begun,” Mayo wrote in a note on Monday. “A new era of freer markets and re-regulation should help improve incomes, returns and banks’ intermediation capabilities.” Mayo believes the new regulatory changes will help money center banks, particularly his top picks in the sector Citibank. The analyst said Trump’s nominee for Treasury secretary, Scott Bessent, has emphasized regulatory reforms to “encourage more lending and revive banks.” Mayo predicts that for every 1% increase in loan growth, bank earnings will increase by about 1%. “Higher capital and lower regulatory costs could lead to lower lending thresholds, gradually helping banks relative to non-banks,” Mayo said. —CNBC’s Michael Bloom contributed to this report.
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