Lack of vision is punishing US bank stock valuations

“They have no vision, they have no future outlook which says ‘this is what’s going to be happening in this industry five years from now, this is how much capital we’re going to have, this is how we’re going to deploy it to grow our earnings'” claimed Bove, pointing to the robust capital positions reflected across the board in the Fed’s latest round of stress tests carried out on 34 U.S. banks as evidence of the capital stockpiling underway.

“What it (the stress test) shows is that the American banks are not having any difficulties at the moment. It indicates that they can generate staggering amounts of capital over relatively short periods,” he continued, before turning to the detrimental impact the opacity has on the sector’s relative stock market performance.

“What you have is kind of a mess in terms of trying to figure out what these companies are, what they’re doing, where they’re going – and that keeps the multiples on these stocks relatively low,” he added.