Regional bank stocks have been on a tear since the 2024 U.S. election, with the SPDR S&P Regional Banking ETF (NYSE:KRE) climbing about 10% versus the broader S&P 500's 5% gain.

Despite this already strong outperformance, JPMorgan analysts, led by Anthony Elian, CFA, see more upside.

The key drivers? A potential Trump administration's pro-business stance, easing regulation and a favorable interest rate backdrop.

In a note shared with clients on Tuesday, Elian indicated that investors — long on the sidelines due to frustrations such as regulation, rising deposit costs and the Spring 2023 banking turmoil — are beginning...