The ramp-up period for banking regulation is now behind us which will support U.S. bank stocks further, Schroders' global head of strategy told CNBC at the World Economic Forum in Davos on Wednesday.
Huw van Steenis flagged this is one of the key reasons, alongside high expectations for the widely anticipated reflation trade, why U.S. bank chiefs have reflected tangible optimism during the annual meet at the Swiss mountain town.
"It's the bump to growth and improvement of interest rates. Interest rate rises could add fifteen to thirty percent to bank stocks earnings in the U.S.," he explained, noting the sector had already rallied 30 percent in recent months.
"There's also enthusiasm that high peak regulation is probably behind us," he continued, adding "it's not going backwards but it's not going to carry on ratcheting so dividends can restart, buybacks can increase and it's that greater confidence that investors can come back and enjoy the benefits of U.S. banks."