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Banks in Best Shape in Three Decades: Dick Bove

Banks are in the best financial shape they've been in three decades, and noted banking analyst Dick Bove said he will continue to recommend bank shares in the second quarter.

"For the last few years we've been dealing with this situation where people buy financial stocks in October and sell them in May," the Rochdale Securities vice president told CNBC Wednesday. But "these companies are doing extremely well" right now.

"Everything is going right" for banks, including loan growth, trading income, and pre-tax earnings, Bove said. Earnings have been up for the last 10 quarters year-over-year and "they are going to do it again for the eleventh," he said, adding that the banks are "in the best shape in three decades."

Bove has been recommendingbank stocks for years, and has been predicting a 25 percent surge in the sector this year. He has “buy” ratings on JP Morgan Chase , Citigroup and Bank of America , and will keep them as “buys” into the next quarter because he sees them continuing to grow.

Here's why: "If you take a look at the prices of those stocks relative to the book value of those companies, you’ll see that in many cases they’re selling at significant discounts to book value," Bove said.

"Then if you look at book value and you compare it to the cash in the company, what you will see is the cash in the company in many cases exceeds book value. The stocks are not just selling at a discount to book value, they’re selling at a discount to cash."

Bove defended his criticism of the media coverage of the Goldman Sachs executive who resigned and claimed the company put profits before customers in a New York Timesop-ed. Bove said the media put too much stress on the comments of one disgruntled, lower-level employee.

The media "don’t talk about the fact that Goldman Sachs' fundamental operations are getting stronger and stronger. They're setting people up to sell this stock, when at the same time [Goldman] could have a blowout quarter on the upside," Bove said.

He concluded, "If Goldman Sachs has a problem, their earnings will go down. If Goldman Sachs does not have a problem, if their business model is sound, if their customers like doing business with them, their earnings will go up."

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Trader disclosure: On Mar 28, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long NXPI; Joe Terranova is long IBM; Joe Terranova is long MCD; Joe Terranova is long EMD; Joe Terranova is long MSFT; Joe Terranova is long JOY; Joe Terranova is long OXY; Joe Terranova is long LQD; Joe Terranova is long HIBB; Joe Terranova is long TBT; Brian Kelly is long XLF; Brian Kelly is long KRE; Brian Kelly is long MS; Brian Kelly is long SPY; Brian Kelly is long QQQ; Brian Kelly is short COPPER; Brian Kelly is short EUROSTOXX; Brian Kelly is short AUSSIE$; Brian Stutland is long AAPL; Brian Stutland is long C; Brian Stutland is long GS; Brian Stutland is long JPM; Brian Stutland is long WFC; Brian Stutland is long MS; Brian Stutland is long NFLX; Brian Stutland is long TLT; Brian Stutland is long INTC; Brian Stutland is long HFC; Brian Stutland is long VLO

For Brian Stutland
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Deutsche Bank (and/or affiliates) owns 1% or more of any class of common equity securities of QCOM
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from QCOM
QCOM has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services

For Dick Bove
Rochdale Securities LLC ("Rochdale") is an institutional brokerage firm that does not make a market in equity securities and does not engage in investment banking. Rochdale and its affiliates, including its principals, may own securities of the companies which are subject of this report but do not own 1% or more of any class of common equity securities of any subject company.

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