NEW YORK (TheStreet) -- Higher interest rates, potentially less regulation under President-elect Donald Trump and potentially stronger economic growth are "lining up perfectly" for financials, Mendon Capital President Anton Schutz said on CNBC's "Power Lunch" on Thursday afternoon.
"There's a lot of trapped capital in the bigger banks because they've had to hoard it. They've had to be more liquid. Clearly, they've been in a penalty box and it looks like they're about to come out of the penalty box and have some fresh ice to skate on," Schutz said.
The opportunities that these conditions bring for financial institutions are higher earnings, higher dividends, higher buybacks and more capital to help stimulate the economy, he said. In the past, it's been hard to get loans on the big banking side, plus the economy has been "tough."
"You don't snap your fingers and all of a sudden earnings get better but clearly there's upside for everybody's estimates for the next couple of years," Schutz explained.
Financials are in the "sweet spot right now" with infrastructure spending, a steeper yield curve and an expected rise in interest rates, he said. The Fed is expected to raise rates at its December meeting, while Trump has said he wants to spend $1 trillion on infrastructure.