Financial 2016 Outlook: Sunny for now but with increasing cloudiness - Oppenheimer (23.37)
Oppenheimer notes there is every reason to think that the banking industry is highly asset sensitive and that net interest margins and revenues will lift off as well after 17 consecutive flat quarters leading to 4Q15. However, they believe that: (1) deposit betas rise as the cycle extends, (2) loan growth will slow in 2017, and (3) the secular pressures on the industry remain intense. While they see select opportunities in the regionals that they believe can raise their ROEs (particularly CFG and FITB), they continue to think some of the greatest values are in C and BAC. They are now driving our targets off 2017 estimates and consequently increasing targets for CFG, CIT, DFS, FITB and GS from $27, $54, $75, $23 and $248 to $30, $57, $76, $24 and $259 respectively; they lower C to $73 from $74.