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 The Equity Desk Forum :Investment Ideas - Creating winning portfolios! :Sector talk
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kmp_saij
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Joined: 19/Feb/2010
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Quote kmp_saij Replybullet Topic: Bank Valuations
    Posted: 10/Oct/2010 at 3:36pm
Hi Boarders,
 
The Equity Desk is a great place to learn things. I believe there is a lot of treasures laid down in various topics of forum.
 
But as Charlei Munger said: "Organized knowledge is powerful thing"
 
India is definitely growing (does anyone has doubt?) and large chunk of juice(wealth) from growth will go to banks. so it is important to have some banks in Indian Investor portfolio. But picking some bank stocks blindly and at high valuation can deteriorate performance of overall portfolio.
 
so it is important to undersstand how to value banks as an investors.
 
 
I have googled stuff and found myself some parameter to consider in valueing banks:
 
Reserves for Loan Losses
Non Performing Loans
Capital Levels
Total Equity to Total Assets
Return on Assets
tangible equity/ tangible assets
ROA and ROE
ratio of shareholders' equity to assets
efficiency ratio
Net interest margin
Deposit growth
loan growth
interest income
non-interestincome
 
I'm myself techie so I have some inherent limitation or say time constraint to understand all of these terms and to find out how to apply this effectively by reading volumeous literature on subject.
 
There are many memebers in TED from finance sector and have good hold on valueing various companies including banks.
 
I have created this so investor can learn the process of valuing banks. so I hope we discuss here just about banks and bank valuation (banking sector) to keep purity of topic intact.


Edited by kmp_saij - 10/Oct/2010 at 3:58pm
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