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Big Bank Earnings Will Have Us Cringing: Bove

If you’re looking at regional bank earnings you’ll be cheering, but if you’re looking at large investment banks you’ll be cringing, Rochdale Securities bank analyst Dick Bove told CNBC’s “Closing Bell.”

JP Morgan Chase headquarters
Bloomberg | Getty Images
JP Morgan Chase headquarters

Bove also isn’t too concerned about JPMorgan’s trading lossahead of its earnings release on Friday. “If JPMorganloses $9 billion, pre-tax, on this trading situation, it will still only have 12 companies in the U.S. that make more money than it.” It can afford to take a hit of this nature, Bove said.

Wells Fargoreports earnings on Friday as well.

Bove also said these big banks are critical to growing the U.S. economy.

“If you take a look at the history of U.S. financial system going back to Alexander Hamilton, you’ll not find one period in which big banks are shrinking or big banks are being reduced in size that the economy is growing,” Bove said. “You’ll find multiple periods when big banks are growing and big banks are increasing in number that the economy is moving ahead.”

He doesn’t expect that new financial regulation will stop another financial crisis from occurring either. "There's no period in time in which the banks create financial crises," Bove said. "They help facilitate financial crises." (Related: Break Up the Big Banks? Why It Could Actually Happen).

The safe way to play the banking sector is through the big regional banks like US Bancorp , BB&T and PNC Financial, Bove said.

He prefers the riskier big bank stocks like JPMorgan Chase , Bank of America , Citigroup , and Wells Fargo .

Symbol
Price
 
Change
%Change
BAC
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BBT
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C
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JPM MLP ETN
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PNC
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USB
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WFC
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