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Bank Valuation: Understanding Key Ratios and Metrics

Tom Spencer

In the previous article , we looked at how banks make money and how they must meet capital requirements. In this article, we will explore the importance of profitability ratios and valuation metrics that are crucial when analyzing banks. We will examine each in turn.

Metrics 88
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Bank Profitability: Decoding the Income Statement

Tom Spencer

The interest rate set by the central bank serves as a benchmark or reference rate for banks. It reflects the bank’s assessment of potential losses it may incur and its commitment to maintaining a strong balance sheet. While not covered in this article, being aware of banks’ capital requirements is also crucial (e.g.,

Banking 88
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Your Company Needs a More-Radical Board of Directors

Harvard Business

My guess is that while a poor balance sheet might cause restless sleep, it’s the thought of an incorrectly reported balance sheet that brings on night terrors. I’m not against benchmarking and norming. While benchmarks are useful inputs for compensation decisions, they shouldn’t be a straitjacket.

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Monetarists Accuse ECB of "Dangerous Game of Chicken"; The REAL Dangerous Game

MishTalk

In addition to holding its benchmark rate at 0.25%, the ECB also left the rate it pays on bank deposits unchanged at zero. The ECB balance sheet has plummeted to 23pc of eurozone GDP from a peak of 32pc in July 2012. The second ridiculous notion in the articles is "Five Wise Men" in Germany can plan the European economy.

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BIS Slams the Fed; Ridiculous Question of the Day: "Is The Fed Going To Attempt A Controlled Collapse?"

MishTalk

Earlier today, reader Charles asked me what I thought about an article on ZeroHedge entitled " Is The Fed Going To Attempt A Controlled Collapse? " Historical evidence shows that this rarely happens following a balance sheet recession. This would require the growth rate to exceed the pre-crisis average for several years.

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Jeremy Grantham 1999, Jeremy Grantham Today: "Over Next Seven Years, Market Will have Negative Returns"

MishTalk

The entire article is well worth a read. The next bust will be unlike any other, because the Fed and other centrals banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We produced pretty good numbers, but they’re way behind the benchmark. Grantham : No.

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Swiss Bank Hits Customers With Negative Interest Rates; Crazy? What About Velocity?

MishTalk

emphasis in caps from the article). With its balance sheet totalling nearly 1.6 and Bank of England Governor Mark Carney said he could now cut the benchmark rate below the current 0.5 Economic Distortions That's actually a balanced synopsis by Bloomberg as far as it went. percent if necessary.

Banking 28