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Bank Valuation: Understanding Key Ratios and Metrics

Tom Spencer

A higher ratio of fee income implies less traditional credit risk and less balance sheet usage (therefore higher ROE) but also implies greater market risk related to securities portfolios and potentially higher revenue volatility related to volatility in capital markets. Valuation Metrics Price-to-earnings (P/E) Price-to-book (P/B) 2.1

Metrics 88
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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. ECB president Mario Draghi said: "We have to dispense with this idea of deflation. The answer is no."

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Pettis on Strains in China's Banking System; Avoiding the Fall

MishTalk

While the benchmark deposit rate was officially lowered from 3.00% to 2.75%, the upper limit that banks can pay for deposits remained unchanged at 3.30%. It may seem strange to have both a benchmark rate and a “floating range” that establishes a cap, instead of just setting a cap, as was the case until very recently.

Banking 71
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Reflections on 2013; What's Important, What's Not? What's Ahead?

MishTalk

Had I suggested in 2007 that the Fed balance sheet expansion of $75 billion a month would have been considered "tightening" people would have thought I was nuts. Orwell''s book 1984 was written in 1949. At long last, the Fed has finally started to taper. Here we are. On December 31, I commented Celebrate the New Year: 1984.