Gerard Cassidy, chief banking analyst at Royal Bank of Canada Capital Markets (RBC Capital Markets), said investors with a "lack of interest" or negative attitude towards bank stocks would change their positions in the second half of this year. Cassidy expects bullish sentiment to make a comeback due to strong revenue growth and optimism about credit expansion.

"you can really see people starting to return to bank stocks," he said. At this level of valuation, there is limited room for downside. At the same time, I think this will be the real rebound point for these stocks when people realize that banks will no longer have the credit problems of 2008-09. "

Cassidy, one of the highest rated analysts for "institutional investors", released his latest forecast after the Fed released the results of the latest stress tests on banks. The report shows that 34 US banks have enough capital to cope with the sharp decline.

At the beginning of Cassidy: "this stress test tells us that unlike in 2008 and 2009, when 18 of the top 20 banks cut or cancelled dividends, it won't happen again." These banks are well capitalized. In an economic downturn, paying dividends will be safe. "

U. S. financial stocks have been under pressure. With only one week left in the first half of the year, the S & P 500 banking sector fell 17 per cent. Cassidy believes that the sector has been unfairly punished for market fears of a recession.

Cassidy speculates that higher interest rates will lay the groundwork for "staggering figures" at the beginning of the third quarter. He stressed that Bank of America Corporation (BAC.US) was the main beneficiary. "We expect Bank of America Corporation's net interest income to grow by 15 to 20 per cent this year because of rising interest rates," Cassidy said. He rated the stock as "buy".

At the same time, he expects banks such as Deutsche Bank and Credit Suisse to report better results this year. Cassidy believes that even if there is a financial shock, they should be able to withstand and have healthy capital.

"the real risk is outside the banking system, and once people realize that credit conditions are not that bad and revenue growth is very strong, market confidence is expected to change in the second half of the year," Cassidy said. "