Expert reveals the big bank he can’t ignore, and why the market may be underestimating it.
Transcript:
CAROLINE WOODS: So I guess if you could only buy one big bank right now, given the run up that we’ve already seen with so many of these names, which one would it be Stephen?
STEPHEN BIGGAR: Well, it’s a good question and thanks for putting me on the spot. So yeah, I think JPMorgan, you know, tends to lead most lists. And there’s a couple of reasons for that. They do have among the best growth EPS growth in the group and better loan growth. They also have very high returns on equity relative to the group. They are dominant in most of their areas in capital markets that helps, of course, the largest bank by assets. They’ve got the most branches in the U.S. They’re expanding that branch network. Good efficiency levels a well-run bank, so they really score highly across the board in most of the metrics that analysts are going to look at. And I think that’s and you can say, yeah, the run up is certainly there. The valuation is higher than it had been clearly. But they’ve got a long runway for growth. You know, one thing we haven’t talked about is the possibility of bank deregulation as early as late this year. So I think when you look at the big banks, they are also going to be the biggest beneficiaries of a deregulatory environment for banks to the extent they, they don’t need to hold quite as much capital, they can use that to lend out. And JP Morgan is the bank that holds the most amount of capital of any other. And therefore their ability to use that as a growth vehicle to lend out to be a little bit more, shall I say risky in the lending space. And they can certainly do that if they don’t have to have those dollars sit-in reserve as, as a capital requirement. So I think that’s an unknown type of catalyst for, for bank shares here that’s not being fully recognized by, by the current valuations. But to your point, it will be more beneficial for the big banks, which have already been outperforming.
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