- US bank stocks surged following Donald Trump's presidential election victory.
- Markets see looser regulations and changes in oversight spurring more profits for banks.
- Analysts see more consolidation, increased commercial lending, and more dealmaking under a Trump presidency.
US bank stocks rallied on Wednesday after Donald Trump cruised to victory in the presidential election, with markets eyeing a better environment for dealmaking and lending to drive stronger profits.
Shares of the largest US banks soared ahead of the opening bell. JPMorgan and Bank of America both rose 6%, Citi rose 8%, and Wells Fargo jumped 10%. Goldman Sachs and Morgan Stanley climbed 6% and 8%, respectively.
The SPDR S&P Bank exchange-traded fund climbed 8%.
Investors flocked to financial stocks as a popular "Trump trade" in the weeks leading up to the election, with allies of the president-elect stating that Trump planned to unravel many of the regulations imposed on the banking sector after the 2008 financial crisis.
According to Gerard Cassidy, a large-cap bank analyst from RBC Capital Markets, Trump's victory is likely to see some top regulators ousted, including the heads of agencies like the Consumer Protection Bureau and the Office of the Comptroller of the Currency.
More banks could also consolidate in the coming years, assuming Trump's cabinet and advisors adopt a "pro-business" stance, Cassidy speculated. Commercial lending could also pick up, potentially causing bank revenue to beat expectations next year, he added.
"We've been very optimistic and bullish about the bank stocks all year, and last night's win by Trump continues that bullishness," Cassidy said in an interview with CNBC Wednesday morning. "We're going to see a real change in anti-trust, and we're going to see a change in banking regulation as well, and that's going to be positive for the banks."
Leading up to the election, analysts also said they saw a fresh wave of dealmaking under Trump amid a potentially looser anti-trust stance from his administration. That could result in increased advisory revenue for big banks and help drive up profits.