Well known banking analyst Dick Bove warned in a CNBC interview on Wednesday that earnings from the banking sector will likely disappoint in the first quarter.
Bove, a financial strategist at Rochdale Securities, believes the expectations for a drastic improvement in loan losses banks are dealing with may be unwarranted.
“This is going to be one of the more interesting quarters, because over the last 12 to 13 months, bank stocks have roughly tripled because of an expectation that loan-loss provisions are going to come down and earnings are going to be quite good,” Bove told CNBC.
Bove isn’t looking for much to change on a whole in regard to the lending units of most banks, believing that the business is still slow and presents a drag on results.
“You’re going to see weak loan volume, stress margins, continued problems with the loan-loss provision and even problems with non-interest incomes,” added Bove.
Though there has been some improvement in loan loss provisions at many larger banks, many banks have yet to show improvement in the area and still remain unprofitable.
The regional banks have really fallen into this mold more, with banks such as Fifth Third (NYSE: FITB) struggling with a deteriorating loan portfolio.
