"While the earnings growth has been robust, what we think has really cheered investors the most is the stability and predictability," he wrote in a June 25 report.
While bank earnings have been recovering since 2011, the early quarters were very volatile. There is less volatility now, notes Kotowski.
According to the analyst, "as long as credit quality is good, banking is a fairly predictable law of numbers kind of thing."
Although banks are no longer undervalued, it is still worth staying in the group, he says. "While it is hard not to have a 'profit-taking' mentality after the 89% run in the BKX since the 2011 lows, one needs to keep perspective that the stocks are still slightly undervalued to the S&P historically, that the regulatory changes have stabilized, that they are likely to grow earnings in line with the S&P and that the resumption of loan growth is still to come," he wrote.-- Written by Shanthi Bharatwaj in New York. >Contact by Email. Follow @shavenk