Mortgage and other loan re-pricing will add about seven basis points to margins in the September half, according to Deutsche Bank analyst James Freeman.A Deutsche review of the sector, published last week, includes a forecast for a much stronger September half for the major banks.Margins were down in the March half and earnings were flat, apart from strong trading and markets results. Margins were hit by higher retail deposit funding costs.Deutsche said: "We believe the banking sector is poised to enjoy strong growth in the second half of the year, driven by the benefits of asset re-pricing and productivity measures."Following the Reserve Bank's 50 basis point reduction in the cash rate in May, lenders cut their standard variable rates by an average of 32 basis points. Rate cuts in response to the cash rate reduction of 25 basis points this month have averaged 20 basis points so far.At-call deposit rates fell by an average of 43 basis points in May, and, according to Deutsche, term deposit rates have fallen by about 60 basis points since March. Deutsche said: "Benefits from asset re-pricing will outweigh the pressure of deposit costs."Deutsche favours ANZ and Commonwealth Bank. It said: "ANZ and Commonwealth Bank have strong funding bases and are likely to generate superior growth compared with their peers over the next few years."NAB and Westpac have deposit to loan ratios that are likely to impede lending growth or bring about greater margin decline."Deutsche said trading income would also be supportive for ANZ and Commonwealth.It said wholesale funding was a risk factor. "Very little issuance has been done in recent months. However, CDS spreads suggest that issuance cost on new term debt has increased by 50 basis points since March. Banks can alleviate this by issuing covered bonds."ANZ and CBA are better placed in terms of their wholesale funding task."