The headwinds in the consumer finance industry may finally be subsiding in 2017, and Deutsche Bank analyst David Ho is bullish on a handful of top stocks picks. In a new research note, Ho spelled out five themes Deutsche Bank will be watching in the space in 2016:
- Donald Trump’s push for deregulation and tax cuts will be bullish for consumer finance earnings.
- Consumer leverage will increase, boosting loan growth more than credit risk.
- Extended U.S. Labor market strength will delay credit cycle concerns.
- Rising interest rates will boost net interest margins (NIMs).
- Higher consumer spending and inflation will begin to boost fees/loans by the end of the year.
Deutsche Bank’s top stock picks for 2017 are OneMain Holdings Inc OMF 2% and Synchrony Financial SYF 0.62%. Ho believes the previous guidance cuts at OneMain were a temporary issue due to issues with branch integration. He calls OneMain the “top beta name” in the space and says the firm has plenty of catalysts ahead in 2017.
Ho names…
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