The largest banks will continue making progress next year, but the industry's many problems are taking longer than expected to resolve, analysts at investment firm Keefe, Bruyette & Woods said in a series of research notes Thursday.
Thursday, December 15, 2011
Meanwhile, regional banks are poised to outperform the market next year.
The analyses were part of KBW's year-ahead outlook. A report was published for universal banks (the largest, including Bank of America and Citigroup), large-cap banks (including BB&T and Fifth Third) and regional banks.
Universal banks: The analysts recommended investors market weight the stocks despite underperforming this year -- though they're the most cautious about Bank of America. The European financial crisis, mortgage issues, the Volcker Rule implementation and weak capital markets activity will still buffet them.
Large-cap banks: This class gets mixed opinions. The analysts said to buy shares of the banks that will be able to redeploy capital the best. They gave Winston-Salem's BB&T high marks.
Regional banks: This group has significant advantages over its larger peers, the analysts said, including not having to participate in the federal government's stress tests and no European exposure. They expect profitable M&A activity to pick up in the second half of the year.
Posted by Andrew Dunn at 4:30 PM