Are you looking for investing your money in US bank stocks? US financial industry may still be an interesting sector, as it has lower regulatory costs than any other sectors. Some analysts predict that US financial sector will have a healthier economic backdrop, at least in two years to come. So, if you are interested in this sector, Gerard Cassidy – a managing director at RBC Capital Markets, offered you 3 best choices of banks with top-pick stocks.

Gerard Cassidy: Here Are Top-Pick US Bank Stocks

Gerard Cassidy is a senior analyst in financial sector. He predicted that certain bank names would outperform the other in terms of stock. Here are the options:

Starters’ Choice

Bank of America is still the best pick for starters. The bank has been showing some advantages compared to any other US banks, including increasing revenue and rising rates. Another name in this category is Citigroup. The bank is in a healthy state, thus making it an interesting choice for beginners. According to Cassidy, investors can expect higher dividends, strong business positions, particularly in credit card, and more buybacks.

Low-Risk Choice

Investors who prefer lower risk can watch JPMorgan as an attractive candidate. JPMorgan has been a global leader in many sectors. The bank is also under a great managerial state with Jamie Dimon as the Chief Executive.

Cassidy said that the next few years would be characterized by increasing capital returns to the shareholders in the US banks. The capital returns may come in the form of buybacks as well as dividends. After the last crises, the US banks are now rebuilding their business and improving fund management system. Cassidy even predicted that the shareholders’ earnings would rise by almost 40%. He further said that the dividends could rise not only in terms of dollar but also in terms of earning percentage.

US Financial Regulations Support the Banking Sector

According to the RBC’s managing director, the current financial regulations work on the banking sector’s behalf. Some changes may happen, but they will benefit the banks. For instance, he predicted that resignation of Daniel Tarullo – a top regulator at the Federal Reserve – in February 2017 would further reduce the burdens on bank. Chances are that he will replaced by a senior regulator, who prefers more flexible latitude towards the banks.

Tarullo’s himself can implement rules that provide the banks with a certain degree of latitude. For instance, the annual stress tests, which the banks have now, may be change into a two or three yearly basis. If this is the case, the burdens on the US banks will reduced without any need to change the current financial regulations. With lower burdens, US bank stocks will be even more profitable.

However, Cassidy also suggested some corrections, particularly in the level of capital reserves, which the banks should hold. He thought that the current conditions of capital reserves in some banks have been too high. The law only requires 7% of the core capital plus 1.5% buffer. The truth is that some banks capital reserves more than 12%. He correcting the rule since the Federal Reserve is health enough to manage the funds.