Strong trading activity will help the nation’s largest banks post good profits in the 4Q while their smaller counterparts will continue to struggle, analyst Dick Bove told CNBC.
CRE damage and the need to build reserves will cause about 60% of regional banks to post losses in Q3 and Q4, Bove said. According to Bove the regional banks “are under-reserved.”
On the capital market side however, he says, the situation looks considerably better. Bove thinks the strong activity in fixed income market, particularly with issues by new offerings, will boost some of Wall Street’s biggest names. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), says Bove, will do pretty well. And the ones in the middle, like Bank of America (NYSE:BAC) and Citigroup (NYSE:C), will probably be marginally profitable or marginally unprofitable. So, where you should put your money from Bove’s perspective is in Goldman Sachs and Morgan Stanley.
Bove also reiterated during his interview positive statements about Bank of America. While the company still faces some losses, investors should look forward on BofA, which he said he expects to see losses reduced dramatically in the coming years.
