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Deutsche Bank's favorite bank stocks are Goldman, JPMorgan following earnings results

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Lloyd Blankfein, chairman and CEO of Goldman Sachs at the World Economic Forum in Davos, Switzerland.
David A. Grogan | CNBC

Deutsche Bank on Thursday revealed its favorite financial stocks, selecting Goldman Sachs, JPMorgan and Wells Fargo as its top picks given the earnings potential in the months ahead.

"We continue to prefer market sensitive banks over large regionals. This reflects our view that leverage to rising rates may already be mostly (or more) priced in while there may still be upside to capital market businesses (particularly in FICC [fixed income, currencies and commodities]) from a stronger economy and a less onerous regulatory environment," equity analyst Matt O'Connor wrote in a note to clients.

Deutsche Bank believes balance sheet growth will be as important as higher interest rates in 2017 and beyond, a trend that some investors might be missing by blindly buying the entire financial sector.


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