Ryan: The bar had been set higher for the banking sector coming off of 2025
Speakers
Devin Ryan
— Citizens JMP
Summary
Devin Ryan, senior research analyst at Citizens, previewed regional-bank Q4 results and argued the banking sector has met a high bar. He highlighted resilient net interest income, capital-markets recovery, a healthy consumer, and capital/regulatory relief as positive themes. He also said regional banks look relatively attractive on valuation, while Goldman Sachs and Morgan Stanley remain a top opportunity due to the continuing capital-markets tailwind.
- Devin Ryan of Citizens previews Q4 results for regional banks.
- He says the high bar for bank earnings has been met so far.
- Net interest income resilience, capital markets, consumer health, and capital/regulatory relief are key themes.
- Regional banks trade at a discount to the S&P multiple versus history.
- Large banks have outperformed, partly on passive ETF flows.
- Ryan calls large investment banks a best opportunity, citing Goldman Sachs and Morgan Stanley.
- Regional banks face rising cost and scale pressures.
- The interview asks for a best opportunity and a name to avoid, but the transcript cuts off.
Ideas
Capital relief supports large-bank returns.
Capital relief and regulatory relief are a key positive for large banks this year. Even though big-bank management has been reluctant to quantify it, the direction of travel points to more capital return, optimization, and reinvestment into higher-return opportunities.
Regional banks look well positioned into earnings.
Regional banks are well positioned into Q4 earnings because the high bar has been met, net interest income should be resilient even in a lower-rate environment, capital-markets recovery remains constructive, the consumer is in good shape, and capital/regulatory relief should support returns. The stocks have done well but have lagged the largest banks, so he expects positive regional-bank earnings-season performance.
Investment banking tailwind supports Goldman, Morgan Stanley.
Large investment banks remain a best opportunity because capital-markets activity was strong last year and that tailwind can continue; he specifically cites Goldman Sachs and Morgan Stanley after strong large-investment-bank earnings.
