U.S. financials should benefit from lower regulatory costs as well as a healthier economic backdrop over the next two years, RBC Capital Markets' equity research chief said on Wednesday.
"I think what we're going to see is lower expenses for the regulatory costs for these banks…it's going to free up more capital," Gerard Cassidy, managing director of equity research at RBC Capital Markets, told CNBC's Squawk Box.
Additionally, idiosyncratic drivers for some of the universal banks – the largest financial services institutions with global operations – will see certain names primed to outperform peers, according to the senior analyst.
For starters, Bank of America should benefit from rising rates and increasing revenues as well as the broader follow through effects from strength of the U.S. economy. Another name to watch is Citigroup, according to Cassidy, which is overcapitalized and therefore a capital return story.
"Investors should expect higher dividends, more buybacks and a very strong credit card business," advised Cassidy.