The KBW Bank (stock) Index has gained 18.5 percent in the past year, and the rally likely has further to go, says Andrew Sleeman, a portfolio manager of the Franklin Mutual Financial Services Fund.
"The economy is starting to pick up, we're starting to see some loan growth, and an interest-rate rise could lift the whole sector," he told
CNBC. "If rates do climb, then financials could be the sector to be exposed to."
Rising interest rates would allow banks to earn more income on their loans and fixed-income investments.
Editor’s Note: New Warning - Stocks on Verge of Major Collapse
Bank stocks are back to paying dividends after an interruption during the financial crisis, and Sleeman sees further dividend increases as regulators grow less strict.
"It's a huge opportunity for total return to improve," he noted. "Whether it's through [share] buybacks, dividends or a combination of both, there's certainly an opportunity to increase returns to shareholders."
And the tighter regulation up until now has put bank balance sheets in their best shape ever, Sleeman said.
Meanwhile, like many others, Mark Williams, a former bank examiner who teaches finance at Boston University, is unimpressed by the government's recent prosecution of major banks.
"The banks extracted billions from unassuming customers, and now Justice has extracted billions of dollars in settlements to make up for that," he told
The Washington Post.
"But corporate executives should not be able to hide behind their companies and have shareholders pay for egregious behavior."
Editor’s Note: New Warning - Stocks on Verge of Major Collapse
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