** Jefferies expects mid-cap and regional U.S. banks to be well-positioned to report both sequential and year-over-year growth in net interest margin and net interest income in Q2

** NII and NIM are key measures of lending profitability that reflect how much banks earn from the difference between interest collected on loans and interest paid on deposits

** Brokerage adds that it also sees potential for modest upward revisions in FY NIM and NII forecasts for banks with greater asset sensitivity

** "That said, lingering economic and geopolitical uncertainty may prompt banks to maintain a cautious stance with their loan growth outlooks for the second half of 2025" - brokerage

** Adds that fee-income in Q2 will likely be mixed as capital markets revenue remains soft, but could be partially offset by seasonal strength in mortgage activity

** Jefferies says it remains "constructive" on U.S. bank stocks despite geopolitical tensions and lingering tariff/economic uncertainty

** Its top picks in the sector are: Huntington Bancshares HBAN.O, M&T Bank MTB.N, Fifth Third FITB.O, Flagstar Financial FLG.N, Western Alliance WAL.N, Axos Financial AX.N

** U.S. banks will kick-off the Q2 reporting season for Wall Street next month

(Reporting by Manya Saini in Bengaluru)

((Manya.Saini@thomsonreuters.com))