Bank stocks have soared higher since the presidential election and the rally is far from over, top-rated analyst Mike Mayo told CNBC on Monday.
In fact, he thinks the sector can run up another 50 percent over the next three years. And his bullishness isn't dependent on what may happen with President Donald Trump now in the White House.
"We don't need the Trump bump. We don't need deregulation. We don't need higher interest rates. We're still positive on bank stocks," the banking analyst at CLSA said in an interview with "Power Lunch."
The SPDR S&P Bank ETF is up more than 27 percent since the presidential election.
Trump has promised tax cuts and deregulation, including changes to the Dodd-Frank banking regulations, which should boost the financial sector.
The president will also have the opportunity to reshape the Federal Reserve. Last week, Daniel Tarullo, the central bank's top financial regulator, submitted his resignation effective April 5. He has been a member of the Fed's board of governors since 2009.
Mayo said there is a love/hate relationship with Tarullo and Dodd-Frank because the regulation has been both a positive and negative for the sector.
For one, it has resulted in the "most resilient balance sheet" in a generation for the banking industry.
"In the past decade, banks have raised $700 billion of tangible equity, $1 trillion of cash and $3 trillion of core deposits. The U.S. banks are strong enough not to absorb just one financial crisis but two financial crises," he said.
However, what he "hates" about banking regulations is the lack of transparency and the "gotcha mentality" that comes with things like the annual stress tests.
"When banks have numbers that could survive two financial crises, sometimes the Fed says 'still no good," he said.
Mayo believes the Federal Reserve should keep banks resilient but create transparency and efficiency.
For example, JPMorgan alone has 43,000 employees involved in regulatory and compliance functions, he pointed out.
"The four largest banks are on track, over five years, to have $100 billion of regulatory and control costs," he said. "That needs to be reduced while preserving the resiliency of the banks."
— CNBC's Berkeley Lovelace Jr. contributed to this report.
