Banking Stocks Measurement and Selection for investment
Parameter to consider while choosing banking stocks.
Avoid banking Panic :
A Not to be in tough situation) Look Return on equity lowest . if number is negative ----- avoid. Important.
1. Sec - website : 10q.
2. Annual income / shaeholder equity
Long term should be excess of 10 % : if good bank --- around 15% range.
B Efficiency ratio ) 60% range and should be low then 60 %. if 75 % only left 25 % for tax, shareholder.
good banks are in 50% range and unique 40% and more discipline.
C Profitability ) 4.5 % or higher.
Valuation : Buy at half times of book value and sell at two times of book value.
For Indian Banks : Buy at less than half book value and sell at one times of book value.
Parameter to consider while choosing banking stocks.
- P/E
- P/B
- EPS
- Debt ratio
- Deposit growth
- Earning retention ratio
- Loan book
- Capital base Base- or Base 2
- Quarterly/ Yearly Growth
- Provisions
- Net NPA
- Gross NPA
- Net Margin
- Return on investment
- Return on equity
- Dividend percentage
- Dividend yeild
- Treasuring income
- Management efficiency.
Avoid banking Panic :
A Not to be in tough situation) Look Return on equity lowest . if number is negative ----- avoid. Important.
1. Sec - website : 10q.
2. Annual income / shaeholder equity
Long term should be excess of 10 % : if good bank --- around 15% range.
B Efficiency ratio ) 60% range and should be low then 60 %. if 75 % only left 25 % for tax, shareholder.
good banks are in 50% range and unique 40% and more discipline.
C Profitability ) 4.5 % or higher.
Valuation : Buy at half times of book value and sell at two times of book value.
For Indian Banks : Buy at less than half book value and sell at one times of book value.
