Loan growth also has more room to expand. Accounting for this year’s gains, growth is still below its long-term average and still a far shot away from historical peaks. If economic growth remains positive and consumer and business confidence continue to strengthen, the sector may enjoy additional loan growth.
Furthermore, in an expanding economy, the Federal Reserve will be more likely to hike rates, which will also mean greater returns on loans and improved net interest margins for banks. [Regional Bank ETFs for a Rising Rate Environment]
SPDR S&P Bank ETF
For more information on the financials sector, visit our financial category.
Max Chen contributed to this article.