Many major banks such as JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and others have recently announced huge increases in their returns of capital to investors. Goldman Sachs’ experts believe it makes banks very attractive.
According to Goldman Sachs (NYSE: GS), the 23 banks, that are subject to the CCAR stress tests administered by the Federal Reserve, will return 43% more capital to investors in 2017 than in the previous year.
Bank of America — 105%; Citigroup — 81%; JPMorgan Chase — 54%; Morgan Stanley — 36%, as it is shown in Goldman Sachs’ estimation. Payouts to shareholders will also increase in the coming years, returning billions of dollars to investors, Goldman Sachs projects.
Additionally, the experts believe it is high time for deregulation that is not yet reflected in bank stock prices. They point out that financial stocks trade at a relative discount to the market.
Although, bank stocks may continue to lag the overall stock market, as they have recently, due to low inflation and other macro forces, they are poised for significant gains as the result of positive trends at the micro level, Goldman Sachs concludes.