And now for some good news!

Banks back to business as usual? All these bonuses have to come from somewhere..

Bove: Banking Stocks Could Quintuple
By: Gene J. Koprowski

Banking analyst Richard Bove of Rochdale Securities is optimistic about the banking sector, saying that profits at some institutions could “quintuple” in the coming year.

In an interview with Barron’s, Bove, considered the dean of the banking analysts’ corps on Wall Street, said that his firm is not recommending Washington Mutual or Wachovia but that he is enthusiastic about Bank of America, Citigroup, PNC Financial, BB&T, UnionBanCal, U.S. Bancorp, and Wells Fargo, which he reckons represent incredibly good values.

Bove said these stocks became massively oversold because of the hysteria during the last few months of last year, when it was believed that financial companies across the U.S. could not survive the current downtown turn in housing.

Bove notes that these firms are now reporting earnings numbers which indicate they are not only are they going to survive the subprime crises, but that they will show profits.

Though there have been “horrific” loan losses in the near term, Bove rates Bank of America stock as a “buy” and says the bank’s purchases of Merrill Lynch & Co. and Countrywide Financial Corp. were “good for the business.”

Bank of America stock should rise to $19 per share from his previous forecast of $14 per share. He suggests the stock price may triple in the next few years, as he said in his own research note to investors.

Bove said the valuation of bank stocks is now shifting from tangible common equity ratios to earning power.

U.S. banking stocks are not the only ones poised for a run. According to report in Forbes, Chinese banking stocks have surged in Shanghai and Hong Kong.