Dick Bove: Goldman Earnings Will Remain Strong Throughout Year (GS)

Rochdale Securities’ Dick Bove, tells FOX Business Network’s (

) Brian Sullivan Goldman Sachs’ earnings will “go up pretty sharply” despite their poor second quarter performance.

“It wasn’t any shock that the company did poorly. When we saw the numbers for JP Morgan, Bank of America and Citigroup last week and their trading activity was down 30-50%, the fact that Goldman was down 40% was mid range. What Goldman proved today was you can’t be better than what the market gives you, and the markets weren’t giving very much in the second quarter.”

“I think the earnings will go up pretty sharply. We are starting off the third quarter with a pretty positive note. Goldman Sachs was the lead banker for the Agricultural Chemical Bank of China, which was the biggest offering of any IPO ever. So that means that their investment banking income starts off with a big boost in the 3rd quarter.” “Basically by not lowering the estimates, what we are saying is that this company will go back to business as usual, and business as usual should improve.”

“You are dealing with a situation where money has to be invested. People can’t sit on the sidelines. Money will be coming back into this market. Things in Europe are starting to calm down somewhat. I am not sure where the economy is going to go, but we are building a basis on which there is going to be a lot of investment banking activity, trading will increase and Goldman will get its share. So Goldman’s earnings will be quite strong for the remainder of this year.”

“Smaller banks have business models that don’t work. Over the last 25 years you have lost one small bank every day for the last 25 years. That’s 9,000 banks. These big banks did not go out with machine guns and say give me your money. They offered better services at better prices and customers chose to do business with them. That’s not bad. What’s so bad about companies doing well.”

“I don’t think there is any real problems for the US big banks. Plus the earning capacity which these big banks are showing at the present times is literally staggering. These companies are showing in their balance sheets they have the capacity to show a significant increase in earnings if the economy holds steady.”

“It doesn’t look that way. The Spanish offering went up, Greece was able to sell bonds, the Euro is up. All of those indicators would suggest that if Europe was going to go off track, it’s not going to happen over the next 6-12 months.”