Richard Bove. (Photo: Jin Lee/Bloomberg)
Plummeting oil prices will crush bank stocks already facing weak lending, margin pressures, higher loan losses and product price deflation, according to Odeon Capital analyst Dick Bove.
"A sharp decline in oil prices will be a body blow to an industry already at high risk," Bove said in a note. He advised investors avoid the group as all major banks, including Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., are large lenders to companies with ties to the energy sector and now face a "big problem."
He also flagged regional banks U.S. Bancorp, PNC Financial Services Group Inc., Comerica Inc., KeyCorp and Regions Financial Corp. Three Canadian banks, Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal may also be at risk, he said.
Bank shares kept collapsing in early trading as Treasury yields touched new lows, with oil shock fears compounding concern about the spreading coronavirus.
