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Here’s why Wall Street bank earnings may be stronger than forecast

Wall Street's biggest financials may post better results than expected this earnings season, as banks like JPMorgan Chase attempt to ramp up loans sales in the face of ultra-low interest rates, a well-known analyst told CNBC.

JPMorgan was among the first major banks to post second-quarter results, reporting earnings on Thursday that easily beat expectations.

"I think what JPMorgan did was change its strategy this year from what it had been over the last couple of years, in that it started pushing the sale of loans much more aggressively and that showed up in their earnings and I think that you might see the same thing with other banks," Dick Bove of Rafferty Capital Markets said on Friday.

JPMorgan reported quarterly earnings of $1.55 per share on Thursday, versus a consensus estimate of $1.43. Average core loans were up 16 percent year-on-year.


JPMorgan signage on the door of an office building in New York.
Scott Mlyn | CNBC
JPMorgan signage on the door of an office building in New York.

Net-interest income was $11.7 billion, up 6 percent on the year before, with part of that increase driven by loan growth, JPMorgan said in its earnings report.

Bove told CNBC that investors were underestimating banks' ability to thrive.

"There seems to be a lack of understanding that banks sell products. In other words, they sell loans and they sell loans at a price and that price is interest rates. And therefore, what you have is an industry that is being analyzed on the price of the product, without the volume of the product being even though about," he told CNBC on Friday.

After Bove spoke, U.S. Bancorp posted second-quarter earnings per share of 83 cents, above the 80 cents forecast by a Reuters poll. Its average total loans grew by 8.1 percent on the year before. Net interest income increased by 4.5 percent year-on-year.

Citigroup also posted earnings per share that beat expectations on Friday, while Well Fargo's were in line with forecasts.

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