U.S. banks were the best performers among stocks last year as more financial institutions continue to adjust after the 2008 financial crash. Analysts argue that there is more headroom, but some could be left behind as compliance with new rules takes its toll.
"The underlying picture is definitely looking better, for the retail and commercial banks," Richard Staite, a banking analyst at Atlantic Equities told CNBC.
Flickering signs of a housing recovery, compliance with new banking rules and further settlements with private investors are three reasons Staite gave as to why 2013 could be as good for banks as the year before. Atlantic Equities has overweight valuations on Bank of America, Citi and JPMorgan.
"The fundamentals look great, if you trust in a U.S. recovery, in gradual healing of housing and labor and as a consequence consumption you want to be exposed to the basic banking services in the U.S.," Beat Wittmann, the chairman of investment group Dynapartners told CNBC Wednesday.
"There's plenty of upside for years to come in terms of valuation, in terms of economic momentum."
Settlements from the banks continue to make the news as Bank of America announced a $10 billion payment for Fannie Mae on Monday. The mortgage firm had been urging the bank to compensate for loans that it was sold during the lead-up to the crash in 2008, which Fannie Mae said did not meet the company's criteria for purchasing.
"Investors have been worrying about this for years," Staite said. "We knew they were coming at some point, we've just been waiting for these settlements in the fourth quarter."
(Read More: How Retail Banks Are Shrinking)
The Volcker Rule - which intends to restrict U.S. banks executing risky trades - has been another hurdle for banks, despite it not being fully implemented yet. Strait says investment banks in particular have found it difficult to adjust.
"Investment banks are still having a fairly hard time," he said.
"I think the biggest uncertainty regulatory-wise is clearly still hanging over the investment banks, particularly Goldman [Sachs] and Morgan Stanley....I think that that they have looked at the rules as they are written and they've continued with the activities which fall outside of those rules. So it depends on how U.S. lawmakers interpret that."
Richard Staite at Atlantic Equities has no personal holdings in the above stocks, but Atlantic Equities may have company holdings in Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America.