Financial stocks in Asia stand to benefit if the U.S. Federal Reserve continues to gradually raise interest rates, the Asia-Pacific CIO of Credit Suisse said on Friday.

“Higher rates tend to be a bit more positive for the financials. The net interest margins tend to expand, profitability improves, share prices reflect that,” John Woods, Asia-Pacific CIO of Credit Suisse, told CNBC’s “Squawk Box” on Friday.

Banks’ net interest margin is the difference between their borrowing and lending cost; when interest rates rise, banks can increase their lending rates and boost their profitability.

Woods told CNBC he anticipated a rate hike in December this year and looking at Asia’s financials was an important way to position for the move.

The U.S. Federal Reserve maintained its interest rate hike projection of 1.4 percent by the end of 2017 at its last meeting. Expectations for at least one more interest rate hike by the end of the year stood at 72.8 percent on Friday, according to The CME Group’s FedWatch tool.

While the Fed stuck with its interest rate forecast for 2018, the market expected just two rate hikes next year, Woods added.

Nevertheless, if the central bank is right about softness in the U.S. economy earlier this year being temporary, “it’s highly likely we see more interest rate hikes and that will impact Asia,” Woods said.

Although Woods liked energy, telecommunications and health care stocks on a global basis, he highlighted financials as a favored sector in Asia.

“We prefer financials in the Asia region … and actually, recently went overweight Japan as well, partly on expectations of higher rates and a stronger dollar/yen, but also on earnings and the catalyst potentially from the election,” Woods said.

Japan will go to the polls on Oct. 22 after Prime Minister Shinzo Abe dissolved the lower house of parliament on Sept. 28.