U.S. large-cap banks 2019 outlook: Less good doesn't mean bad, buy banks - Barclays
Barclays is bullish on the U.S. Large-Cap bank stocks for 2019. Despite an expected slowdown in GDP growth, post a sharp sell-off into year-end 2018, they believe the U.S. Large-Cap bank stocks have the ability to rise and outperform the S&P 500. They expect high-single-digit EPS growth in 2019 despite a 30% increase in the loan loss provision. JPM remains their Top Pick as it provides both offensive and defensive characteristics. Among the other Money Centers, C, at 0.8x tangible book, is a solid offensive play. They also believe BAC and MS have improved their risk profiles by more than market appreciates. While they expect GS to get through its recent woes, it could take time. Among the trust banks, they view STT as a good offensive play, while BK is more defensive. Looking at the Super Regionals, they expect USB and WFC to turn corner this year, while consumer finance names like ALLY and COF appear overly discounted given their view that unemployment will remain low in the intermediate term. MTB, BBT and PNC should stand out if the backdrop proves more challenging than expected, while CFG and FITB appear more levered to a snapback in sentiment.