pacmandefense

Price to book multiple is a prefered valuation metric for banks. This is because a bank needs to keep on raising fresh capital for future growth. There is a dilution effect from this. Hence one cannot project a banks earnings to perpetuity (and therfore not give a PE multiple).

Apart from PBV also look at RoE for banks.

~Hopethishelps

~Rajat



Edited 1 time(s). Last edit at Monday, September 7, 2009 at 07:25AM by PropTrader.