Is it Finally Time to Bank on Bank ETFs?

“Banks are also poised to benefit from easing financial regulation,” said State Street. “Following the approval of the Economic Growth, Regulatory Relief and Consumer Protection Act in May 2018, the Federal Reserve Bank proposed significant rollbacks of Dodd-Frank, including looser capital and liquidity requirements for large and regional banks. This is likely to reduce compliance costs and boost return of capital to shareholders in 2019.”

Long regard as value plays, bank stocks’ credibility as value names was likely enhanced by the fourth-quarter tumble the group endured.

“Additionally, the fourth-quarter 2018 selloff has created attractive valuation opportunities for bank stocks,” according to State Street. “They are trading at the lowest level based on forward price-to-earnings since October 2011 and nearly in par to their book value. Relative to the broad market, they are at the bottom quintile over the last 15 years based on price-to-book and price-to-forward earnings.”

For more information on the banking sector, visit our financial category.