FIG (Banks & Insurance)
When do you use P/E versus P/TBV for a bank?
Model answer
Use both, and check they tell a consistent story — mechanically P/TBV = P/E × ROTE, so the multiples are linked. P/TBV against ROTE is the workhorse for cross-sectional comparison, and it is the only…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from FIG (Banks & Insurance)
- Why is EV/EBITDA a meaningless multiple for a bank?
- Why does a standard unlevered DCF fail when you point it at a bank?
- Why do bankers value financial institutions on equity value only, never enterprise value?
- What does it mean when people say 'debt is raw material, not capital structure' for a bank?
- Why are capex and working capital effectively undefined concepts for a bank?
- Why is interest expense an operating item for a bank when it's a financing item everywhere else?