LONDON (Reuters) - After several years of restructuring and regulatory pressure, investment banks have reached a turning point after Donald Trump became American president and can look to grow again, according to a study published on Friday.

Lower Manhattan including the financial district is pictured from the Manhattan borough of New York, U.S. June 1, 2016. REUTERS/Carlo Allegri/File Photo

“The world has turned upside down post the U.S. elections,” said the joint annual study by Morgan Stanley and management consultants Oliver Wyman.

“This is the first year since we’ve been producing this paper that we’re looking to see a significant shift to the positive in terms of revenue growth, operational leverage and return on equity,” said Magdalena Stoklosa, head of European financials research at Morgan Stanley.

Globally, investment banks have been on an “intensive diet” since 2011 and have shrunk their balance sheets on aggregate by a third, according to the analysis produced in the 7th edition of the “Blue Paper”.

With the global economy appearing to be on a stable footing, the Federal Reserve raising interest rates and political rhetoric pointing to a pause on new banking regulation, growth beckons for an industry reshaped by the global financial crisis.

In three years’ time, return on equity could reach 13 to 14 percent across the industry from 10 to 11 percent currently, the study said.

Regulatory costs are expected to peak in 2017 and decline by as much as 40 percent by the end of 2020.

However, European banks, lagging in their restructuring programs, are expected to continue to underperform their rivals on the other side of the Atlantic.

U.S. banks could see return on equity rising to 15 percent from 11 percent currently, from a combination of revenue growth and removing costs over the next three years.

European banks are forecast to improve their return on equity to 11.5 percent from 7.5 percent currently, with 75 percent of that uptick driven by cost cutting and only 25 percent by revenue growth.

U.S. banks are sitting on $83 billion of excess capital, which could be used to invest in profitable business lines or paid out in share buybacks or dividends, whilst European banks have a mere $1 billion of excess capital to play with.

Fixed income, currencies and commodities revenues, which faced the brunt of regulation, are forecast to grow 2 percent over the next five years to $119 billion after shrinking to $109 billion from $140 billion over the previous five.

“Unlocking excess capital and collateral turns secular headwinds to tailwinds, powering a sustainable inflection in the global FICC pool for the first time in a decade,” the study said.

“Our bull case “Dares to Dream”. If the US administration’s tax reform, fiscal stimulus, and deregulation agenda is achieved, we would expect much stronger revenue growth and more capital release,” the study said.