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Dick Bove Discusses Bank of America's Earning Power and Job Cuts

September 20, 2012 | About:
Dheeraj Grover

Dheeraj Grover

Well-known banking analyst Dick Bove of Rochdale Securities was on Bloomberg to discuss his views on just-announced job cuts by Bank of America (BAC), and even if it is making money by its cost cutting efforts at this point it has a great set of factors in its favor for great earnings going forward.

-- Have over $1 trillion in deposits and $900 billion in loan outstanding. Merrill Lynch is much better than they expected. Their fee-based businesses are starting to improve.

-- They hired 50,000 people to take care of foreclosure houses. Now that the housing is improving they don't need that many people.

-- The Fed's continuous easing is creating a financial repression and yield curve is not out their for sustainable profits, but the fact is the economy has not gone into recession — it is still expanding and so are commercial loans. Mortgage loans have gone up as well. The banking industry made most money in 2nd quarter of 2012

-- Banks' return on equity is not more than 12% to 13%, which means they are earning their cost of capital.

Source and Credit:, Bloomberg

Here is the video:

About the author:

Dheeraj Grover
I am an individual investor with deep interest in the field of value investing. My ideas and thinking is inspired by highly respected value investors like Ben Graham, Warren Buffett, Walter Schloss, Bill Ruane and Tweedy Browne

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